[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[S. 1324 Introduced in Senate (IS)]
111th CONGRESS
1st Session
S. 1324
To ensure that every American has a health insurance plan that they can
afford, own, and keep.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
June 23, 2009
Mr. DeMint introduced the following bill; which was read twice and
referred to the Committee on Finance
_______________________________________________________________________
A BILL
To ensure that every American has a health insurance plan that they can
afford, own, and keep.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Health Care Freedom Act of 2009''.
TITLE I--ACCESS TO COVERAGE FOR EVERY AMERICAN
Subtitle A--Tax Code Equity
SEC. 101. REFUNDABLE CREDIT FOR HEALTH INSURANCE COVERAGE.
(a) In General.--Subpart C of part IV of subchapter A of chapter 1
of the Internal Revenue Code of 1986 is amended by inserting after
section 36A the following new section:
``SEC. 36B. QUALIFIED HEALTH INSURANCE CREDIT.
``(a) Allowance of Credit.--In the case of an individual, there
shall be allowed as a credit against the tax imposed by this chapter
for the taxable year so much of the qualified health insurance costs of
the taxpayer as does not exceed the sum of the monthly limitations
determined under subsection (b).
``(b) Monthly Limitation.--
``(1) In general.--The monthly limitation for each month
during the taxable year is \1/12\th of--
``(A) $2,000, in the case of an individual
purchasing individual coverage for an eligible
individual, and
``(B) $5,000, in the case of an individual
purchasing family coverage for 2 or more eligible
individuals.
``(2) Limitation.--In no case shall the annual sum of the
monthly limitations with respect to any taxpayer exceed $5,000.
``(3) No credit for ineligible months.--With respect to any
individual, the monthly limitation shall be zero for any month
for which such individual is not an eligible individual.
``(c) Eligible Individual.--For purposes of this section--
``(1) In general.--The term `eligible individual' means,
with respect to any month, an individual who--
``(A) is the taxpayer, the taxpayer's spouse, or
the taxpayer's dependent,
``(B) is covered under qualified health insurance
as of the 1st day of such month, and
``(C) is not covered under employer-provided health
insurance as of the 1st day of such month.
``(2) Coverage under medicare, medicaid, schip, military
coverage.--The term `eligible individual' shall not include any
individual for a month if, as of the first day of such month,
such individual is--
``(A) entitled to benefits under part A of title
XVIII of the Social Security Act or enrolled under part
B of such title, and the individual is not a
participant or beneficiary in a group health plan or
large group health plan that is a primary plan (as
defined in section 1862(b)(2)(A) of such Act),
``(B) in the case of a State that has not made the
election described in section 1939(a)(1)(B) of the
Social Security Act, enrolled in the program under
title XIX of such Act (other than under section 1928 of
such Act), or
``(C) entitled to benefits under chapter 55 of
title 10, United States Code.
``(3) Identification requirements.--The term `eligible
individual' shall not include any individual for any month
unless the policy number associated with the qualified health
insurance and the TIN of each eligible individual covered under
such health insurance for such month are included on the return
of tax for the taxable year in which such month occurs.
``(4) Prisoners.--The term `eligible individual' shall not
include any individual for a month if, as of the first day of
such month, such individual is imprisoned under Federal, State,
or local authority.
``(5) Aliens.--The term `eligible individual' shall not
include any alien individual for a month if, as of the first
day of such month, such individual is not a lawful permanent
resident of the United States.
``(d) Qualified Health Insurance Costs.--For purposes of this
section, the term `qualified health insurance costs' means the sum of
the amounts paid during the taxable year to obtain qualified health
insurance for 1 or more eligible individuals.
``(e) Qualified Health Insurance.--For purposes of this section,
the term `qualified health insurance' includes a high deductible health
plan within the meaning of section 223(c)(2), but shall not include any
insurance if a substantial portion of its benefits are excepted
benefits (as defined in section 9832(c)).
``(f) Other Definitions.--For purposes of this section--
``(1) Dependent.--The term `dependent' has the meaning
given such term by section 152 (determined without regard to
subsections (b)(1), (b)(2), and (d)(1)(B) thereof). An
individual who is a child to whom section 152(e) applies shall
be treated as a dependent of the custodial parent for a
coverage month unless the custodial and noncustodial parent
agree otherwise.
``(2) Child.--The term `child' means a qualifying child (as
defined in section 152(c)).
``(g) Special Rules.--
``(1) Coordination with medical deduction, etc.--Any amount
paid by a taxpayer for insurance to which subsection (a)
applies shall not be taken into account in computing the amount
allowable to the taxpayer as a credit under section 35 or as a
deduction under section 213(a).
``(2) Medical and health savings accounts.--The amounts
taken into account as qualified health insurance costs for any
taxable year shall be reduced by the aggregate amounts, if any,
distributed from Archer MSAs (as defined in section 220(d)) and
health savings accounts (as defined in section 223(d)) which
are excludable from gross income for such taxable year by
reason of being used to pay premiums for coverage of an
individual under qualified health insurance for any month
during such taxable year.
``(3) Denial of credit to dependents.--No credit shall be
allowed under this section to any individual with respect to
whom a deduction under section 151 is allowable to another
taxpayer for a taxable year beginning in the calendar year in
which such individual's taxable year begins.
``(4) Married couples must file joint return.--
``(A) In general.--If the taxpayer is married at
the close of the taxable year, the credit shall be
allowed under subsection (a) only if the taxpayer and
his spouse file a joint return for the taxable year.
``(B) Marital status; certain married individuals
living apart.--Rules similar to the rules of paragraphs
(3) and (4) of section 21(e) shall apply for purposes
of this paragraph.
``(5) Verification of coverage, etc.--No credit shall be
allowed under this section with respect to any individual
unless such individual's coverage (and such related information
as the Secretary may require) is verified in such manner as the
Secretary may prescribe.
``(6) Insurance which covers other individuals; treatment
of payments.--Rules similar to the rules of paragraphs (7) and
(8) of section 35(g) shall apply for purposes of this section.
``(7) Participants in health care sharing ministries.--
``(A) In general.--In the case of a taxpayer who is
a participant or contributor to a health care sharing
ministry during a month in the taxable year, and who is
not covered under qualified health insurance during
such month--
``(i) such taxpayer (and such taxpayer's
spouse and dependents, if such individuals are
covered by such health care sharing ministry)
shall be considered to be eligible individuals
for purposes of subsection (c)(1) for such
month,
``(ii) the amount of such taxpayer's
contribution to such health care sharing
ministry in such month shall be considered to
be qualified health insurance costs in such
month,
``(iii) subsection (c)(3) shall apply to
such taxpayer (and such taxpayer's spouse and
dependents, if such individuals are covered by
such ministry) without regard to the policy
number requirement, and
``(iv) the Secretary may require such
information under paragraph (5) of this
subsection as may be necessary to verify such
taxpayer's contribution to such ministry.
``(B) Health care sharing ministry.--For purposes
of this paragraph, the term `health care sharing
ministry' means any health care cost sharing
arrangement among persons of similar beliefs that is
not in the trade or business of providing health
insurance.
``(C) Credit denied in the case of charitable
contributions.--This paragraph shall not apply in the
case of any contribution for which a deduction is
allowable under section 170.
``(h) Election To Forgo Other Federal Health Benefit Programs.--
``(1) In general.--An individual who is a participant in,
or is entitled to benefits under, any program described in
subsection (c)(2) in any month may elect to forgo such
individual's participation in or entitlement to benefits under
such program in such month. If such election is made with
respect to any month, such month shall not fail to be deemed a
coverage month with respect to such individual solely because
such individual would, but for such election, be a participant
in or be entitled to benefits under a program described in
subsection (c)(2).
``(2) Manner and reporting of election.--The election
described in paragraph (1) shall be made in a form and manner
specified by the Secretary of Health and Human Services, in
consultation with the Secretary of the Treasury, and a
declaration of such election shall be attached to the
taxpayer's return of tax for the taxable year, in a manner
specified by the Secretary of the Treasury.
``(3) Prospective and year-long election.--Each election
described in paragraph (1)--
``(A) shall not be made with respect to any month
beginning before the date of such election, and
``(B) shall be effective for such period (not less
than 1 calendar year) as shall be specified by the
Secretary of Health and Human Services, in consultation
with the Secretary of the Treasury.
``(i) Credit in Excess of Allowable Credit Deposited in Tax-favored
Health Care Accounts.--
``(1) In general.--The excess, if any, of--
``(A) the monthly limitation applicable to the
individual under subsection (b), multiplied by the
number of coverage months of the individual for the
taxable year, over
``(B) the credit allowed in such taxable year with
respect to such individual under subsection (a),
shall be paid by the Secretary into the designated account of
the individual.
``(2) Designated accounts.--
``(A) Designated account.--For purposes of this
subsection, the term `designated account' means any
health savings account under section 223 or any Archer
MSA under section 220 established and maintained by the
provider of the individual's qualified health
insurance--
``(i) which is designated by the individual
(in such form and manner as the Secretary may
provide) on the return of tax for the taxable
year, and
``(ii) which, under the terms of the
account, accepts the payment described in
paragraph (1) on behalf of the individual.
``(B) Treatment of payment.--Any payment under this
subsection to a designated account--
``(i) shall not be taken into account with
respect to any dollar limitation which applies
with respect to contributions to such account
(or to tax benefits with respect to such
contributions),
``(ii) shall be included in gross income of
the taxpayer for the taxable year in which the
payment is made (except as provided in clause
(iii)), and
``(iii) shall be taken into account in
determining any deduction or exclusion from
gross income in the same manner as if such
contribution were made by the taxpayer.
``(j) Coordination With Advance Payments.--
``(1) Reduction in credit for advance payments.--With
respect to any taxable year, the amount which would (but for
this subsection, and without regard to subsection (i)) be
allowed as a credit to the taxpayer under subsection (a) shall
be reduced (but not below zero) by the aggregate amount paid on
behalf of such taxpayer under section 7527A for months
beginning in such taxable year.
``(2) Recapture of excess advance payments.--If the
aggregate amount paid on behalf of the taxpayer under section
7527A for months beginning in the taxable year exceeds the sum
of the monthly limitations under subsection (b) for such
taxable year, then the tax imposed by this chapter for such
taxable year shall be increased by the sum of--
``(A) such excess, plus
``(B) interest on such excess determined at the
underpayment rate established under section 6621 for
the period from the date of the payment under section
7527A to the date such excess is paid.
For purposes of subparagraph (B), an equal part of the
aggregate amount of the excess shall be deemed to be
attributable to payments made under section 7527A on the first
day of each month beginning in such taxable year, unless the
taxpayer establishes the date on which each such payment giving
rise to such excess occurred, in which case subparagraph (B)
shall be applied with respect to each date so established.
``(k) Regulations.--The Secretary shall prescribe regulations for
the administration of this section to ensure that no portion of the
amounts taken into account as qualified health insurance costs are
amounts for which another credit, deduction, or exclusion is allowed
under this subtitle, including through a health flexible spending
arrangement.''.
(b) Advance Payment of Credit.--Chapter 77 of the Internal Revenue
Code of 1986 is amended by inserting after section 7527 the following
new section:
``SEC. 7527A. ADVANCE PAYMENT OF QUALIFIED HEALTH INSURANCE CREDIT.
``(a) In General.--The Secretary shall establish a program for
making payments on behalf of taxpayers who are eligible individuals
within the meaning of section 36B(c) to providers of qualified health
insurance (as defined in section 36B(e)) or to health care sharing
ministries (as defined in section 36B(g)(7)(B)) for such individuals.
``(b) Limitation.--The Secretary may make payments under subsection
(a) only to the extent that the Secretary determines that the amount of
such payments made on behalf of any taxpayer for any month does not
exceed the monthly limitation in effect under section 36B(b) for the
taxpayer for such month.''.
(c) Information Reporting.--
(1) In general.--Subpart B of part III of subchapter A of
chapter 61 of the Internal Revenue Code of 1986 is amended by
inserting after section 6050W the following new section:
``SEC. 6050X. RETURNS RELATING TO QUALIFIED HEALTH INSURANCE CREDIT.
``(a) Requirement of Reporting.--Every person who is entitled to
receive payments for any month of any calendar year under section 7527A
(relating to advance payment of qualified health insurance credit) with
respect to any individual shall, at such time as the Secretary may
prescribe, make the return described in subsection (b) with respect to
each such individual.
``(b) Form and Manner of Returns.--A return is described in this
subsection if such return--
``(1) is in such form as the Secretary may prescribe, and
``(2) contains, with respect to each individual referred to
in subsection (a)--
``(A) the name, address, and TIN of each such
individual,
``(B) the months for which amounts payments under
section 7527A were received,
``(C) the amount of each such payment,
``(D) the type of insurance coverage provided by
such person with respect to such individual and the
policy number associated with such coverage, if
applicable,
``(E) the name, address, and TIN of the spouse and
each dependent covered under such coverage, and
``(F) such other information as the Secretary may
prescribe.
``(c) Statements To Be Furnished to Individuals With Respect to
Whom Information Is Required.--Every person required to make a return
under subsection (a) shall furnish to each individual whose name is
required to be set forth in such return a written statement showing--
``(1) the name and address of the person required to make
such return and the phone number of the information contact for
such person, and
``(2) the information required to be shown on the return
with respect to such individual.
The written statement required under the preceding sentence shall be
furnished on or before January 31 of the year following the calendar
year for which the return under subsection (a) is required to be made.
``(d) Returns Which Would Be Required To Be Made by 2 or More
Persons.--Except to the extent provided in regulations prescribed by
the Secretary, in the case of any amount received by any person on
behalf of another person, only the person first receiving such amount
shall be required to make the return under subsection (a).''.
(2) Assessable penalties.--
(A) Subparagraph (B) of section 6724(d)(1) of such
Code is amended by striking ``or'' at the end of clause
(xxii), by striking ``and'' at the end of clause
(xxiii) and inserting ``or'', and by inserting after
clause (xxiii) the following new clause:
``(xxiv) section 6050X (relating to returns
relating to qualified health insurance credit),
and''.
(B) Paragraph (2) of section 6724(d) of such Code
is amended by striking ``or'' at the end of
subparagraph (EE), by striking the period at the end of
subparagraph (FF) and inserting ``, or'', and by
inserting after subparagraph (FF) the following new
subparagraph:
``(GG) section 6050X (relating to returns relating
to qualified health insurance credit).''.
(d) Conforming Amendments.--
(1) Paragraph (2) of section 1324(b) of title 31, United
States Code, is amended by inserting ``36B,'' after ``36A,''.
(2) The table of sections for subpart C of part IV of
subchapter A of chapter 1 of the Internal Revenue Code of 1986
is amended by inserting after the item relating to section 36A
the following new item:
``Sec. 36B. Qualified health insurance credit.''.
(3) The table of sections for chapter 77 of such Code is
amended by inserting after the item relating to section 7527
the following new item:
``Sec. 7527A. Advance payment of qualified health insurance credit.''.
(4) The table of sections for subpart B of part III of
subchapter A of chapter 61 of such Code is amended by adding at
the end the following new item:
``Sec. 6050X. Returns relating to qualified health insurance credit.''.
(e) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2009.
Subtitle B--Improvements to Health Savings Accounts
SEC. 111. PURCHASE OF HEALTH INSURANCE FROM HSA AND ARCHER MSA
ACCOUNTS.
(a) Health Savings Accounts.--Paragraph (2) of section 223(d) of
the Internal Revenue Code of 1986 is amended to read as follows:
``(2) Qualified medical expenses.--
``(A) In general.--The term `qualified medical
expenses' means, with respect to an account
beneficiary, amounts paid by such beneficiary for
medical care (as defined in section 213(d)) for any
individual covered by a high deductible health plan of
the account beneficiary, but only to the extent such
amounts are not compensated for by insurance or
otherwise.
``(B) Health insurance may not be purchased from
account.--Except as provided in subparagraph (C),
subparagraph (A) shall not apply to any payment for
insurance.
``(C) Exceptions.--Subparagraph (B) shall not apply
to any expense for coverage under--
``(i) a health plan during any period of
continuation coverage required under any
Federal law,
``(ii) a qualified long-term care insurance
contract (as defined in section 7702B(b)),
``(iii) a health plan during any period in
which the individual is receiving unemployment
compensation under any Federal or State law,
``(iv) a high deductible health plan, or
``(v) any health insurance under title
XVIII of the Social Security Act, other than a
Medicare supplemental policy (as defined in
section 1882 of such Act).''.
(b) Archer MSAs.--Subparagraph (B) of section 220(d)(2) of the
Internal Revenue Code of 1986 is amended to read as follows:
``(B) Health insurance may not be purchased from
account.--
``(i) In general.--Subparagraph (A) shall
not apply to any payment for insurance.
``(ii) Exceptions.--Clause (i) shall not
apply to any expense for coverage under--
``(I) a health plan during any
period of continuation coverage
required under any Federal law,
``(II) a qualified long-term care
insurance contract (as defined in
section 7702B(b)),
``(III) a health plan during any
period in which the individual is
receiving unemployment compensation
under any Federal or State law,
``(IV) a high deductible health
plan, or
``(V) any health insurance under
title XVIII of the Social Security Act,
other than a Medicare supplemental
policy (as defined in section 1882 of
such Act).''.
(c) Effective Date.--The amendments made by this section shall
apply with respect to insurance purchased after the date of the
enactment of this Act in taxable years beginning after such date.
Subtitle C--Medical Care Access Protection
SEC. 121. SHORT TITLE.
This subtitle may be cited as the ``Medical Care Access Protection
Act of 2009'' or the ``MCAP Act''.
SEC. 122. FINDINGS AND PURPOSE.
(a) Findings.--
(1) Effect on health care access and costs.--Congress finds
that our current civil justice system is adversely affecting
patient access to health care services, better patient care,
and cost-efficient health care, in that the health care
liability system is a costly and ineffective mechanism for
resolving claims of health care liability and compensating
injured patients, and is a deterrent to the sharing of
information among health care professionals which impedes
efforts to improve patient safety and quality of care.
(2) Effect on interstate commerce.--Congress finds that the
health care and insurance industries are industries affecting
interstate commerce and the health care liability litigation
systems existing throughout the United States are activities
that affect interstate commerce by contributing to the high
costs of health care and premiums for health care liability
insurance purchased by health care system providers.
(3) Effect on federal spending.--Congress finds that the
health care liability litigation systems existing throughout
the United States have a significant effect on the amount,
distribution, and use of Federal funds because of--
(A) the large number of individuals who receive
health care benefits under programs operated or
financed by the Federal Government;
(B) the large number of individuals who benefit
because of the exclusion from Federal taxes of the
amounts spent to provide them with health insurance
benefits; and
(C) the large number of health care providers who
provide items or services for which the Federal
Government makes payments.
(b) Purpose.--It is the purpose of this subtitle to implement
reasonable, comprehensive, and effective health care liability reforms
designed to--
(1) improve the availability of health care services in
cases in which health care liability actions have been shown to
be a factor in the decreased availability of services;
(2) reduce the incidence of ``defensive medicine'' and
lower the cost of health care liability insurance, all of which
contribute to the escalation of health care costs;
(3) ensure that persons with meritorious health care injury
claims receive fair and adequate compensation, including
reasonable noneconomic damages;
(4) improve the fairness and cost-effectiveness of our
current health care liability system to resolve disputes over,
and provide compensation for, health care liability by reducing
uncertainty in the amount of compensation provided to injured
individuals; and
(5) provide an increased sharing of information in the
health care system which will reduce unintended injury and
improve patient care.
SEC. 123. DEFINITIONS.
In this subtitle:
(1) Alternative dispute resolution system; adr.--The term
``alternative dispute resolution system'' or ``ADR'' means a
system that provides for the resolution of health care lawsuits
in a manner other than through a civil action brought in a
State or Federal court.
(2) Claimant.--The term ``claimant'' means any person who
brings a health care lawsuit, including a person who asserts or
claims a right to legal or equitable contribution, indemnity or
subrogation, arising out of a health care liability claim or
action, and any person on whose behalf such a claim is asserted
or such an action is brought, whether deceased, incompetent, or
a minor.
(3) Collateral source benefits.--The term ``collateral
source benefits'' means any amount paid or reasonably likely to
be paid in the future to or on behalf of the claimant, or any
service, product or other benefit provided or reasonably likely
to be provided in the future to or on behalf of the claimant,
as a result of the injury or wrongful death, pursuant to--
(A) any State or Federal health, sickness, income-
disability, accident, or workers' compensation law;
(B) any health, sickness, income-disability, or
accident insurance that provides health benefits or
income-disability coverage;
(C) any contract or agreement of any group,
organization, partnership, or corporation to provide,
pay for, or reimburse the cost of medical, hospital,
dental, or income disability benefits; and
(D) any other publicly or privately funded program.
(4) Compensatory damages.--The term ``compensatory
damages'' means objectively verifiable monetary losses incurred
as a result of the provision of, use of, or payment for (or
failure to provide, use, or pay for) health care services or
medical products, such as past and future medical expenses,
loss of past and future earnings, cost of obtaining domestic
services, loss of employment, and loss of business or
employment opportunities, damages for physical and emotional
pain, suffering, inconvenience, physical impairment, mental
anguish, disfigurement, loss of enjoyment of life, loss of
society and companionship, loss of consortium (other than loss
of domestic service), hedonic damages, injury to reputation,
and all other nonpecuniary losses of any kind or nature. Such
term includes economic damages and noneconomic damages, as such
terms are defined in this section.
(5) Contingent fee.--The term ``contingent fee'' includes
all compensation to any person or persons which is payable only
if a recovery is effected on behalf of one or more claimants.
(6) Economic damages.--The term ``economic damages'' means
objectively verifiable monetary losses incurred as a result of
the provision of, use of, or payment for (or failure to
provide, use, or pay for) health care services or medical
products, such as past and future medical expenses, loss of
past and future earnings, cost of obtaining domestic services,
loss of employment, and loss of business or employment
opportunities.
(7) Health care goods or services.--The term ``health care
goods or services'' means any goods or services provided by a
health care institution, provider, or by any individual working
under the supervision of a health care provider, that relates
to the diagnosis, prevention, care, or treatment of any human
disease or impairment, or the assessment of the health of human
beings.
(8) Health care institution.--The term ``health care
institution'' means any entity licensed under Federal or State
law to provide health care services (including but not limited
to ambulatory surgical centers, assisted living facilities,
emergency medical services providers, hospices, hospitals and
hospital systems, nursing homes, or other entities licensed to
provide such services).
(9) Health care lawsuit.--The term ``health care lawsuit''
means any health care liability claim concerning the provision
of health care goods or services affecting interstate commerce,
or any health care liability action concerning the provision of
(or the failure to provide) health care goods or services
affecting interstate commerce, brought in a State or Federal
court or pursuant to an alternative dispute resolution system,
against a health care provider or a health care institution
regardless of the theory of liability on which the claim is
based, or the number of claimants, plaintiffs, defendants, or
other parties, or the number of claims or causes of action, in
which the claimant alleges a health care liability claim.
(10) Health care liability action.--The term ``health care
liability action'' means a civil action brought in a State or
Federal Court or pursuant to an alternative dispute resolution
system, against a health care provider or a health care
institution regardless of the theory of liability on which the
claim is based, or the number of plaintiffs, defendants, or
other parties, or the number of causes of action, in which the
claimant alleges a health care liability claim.
(11) Health care liability claim.--The term ``health care
liability claim'' means a demand by any person, whether or not
pursuant to ADR, against a health care provider or health care
institution, including third-party claims, cross-claims,
counter-claims, or contribution claims, which are based upon
the provision of, use of, or payment for (or the failure to
provide, use, or pay for) health care services, regardless of
the theory of liability on which the claim is based, or the
number of plaintiffs, defendants, or other parties, or the
number of causes of action.
(12) Health care provider.--
(A) In general.--The term ``health care provider''
means any person (including but not limited to a
physician (as defined by section 1861(r) of the Social
Security Act (42 U.S.C. 1395x(r)), registered nurse,
dentist, podiatrist, pharmacist, chiropractor, or
optometrist) required by State or Federal law to be
licensed, registered, or certified to provide health
care services, and being either so licensed,
registered, or certified, or exempted from such
requirement by other statute or regulation.
(B) Treatment of certain professional
associations.--For purposes of this subtitle, a
professional association that is organized under State
law by an individual physician or group of physicians,
a partnership or limited liability partnership formed
by a group of physicians, a nonprofit health
corporation certified under State law, or a company
formed by a group of physicians under State law shall
be treated as a health care provider under subparagraph
(A).
(13) Malicious intent to injure.--The term ``malicious
intent to injure'' means intentionally causing or attempting to
cause physical injury other than providing health care goods or
services.
(14) Noneconomic damages.--The term ``noneconomic damages''
means damages for physical and emotional pain, suffering,
inconvenience, physical impairment, mental anguish,
disfigurement, loss of enjoyment of life, loss of society and
companionship, loss of consortium (other than loss of domestic
service), hedonic damages, injury to reputation, and all other
nonpecuniary losses of any kind or nature.
(15) Punitive damages.--The term ``punitive damages'' means
damages awarded, for the purpose of punishment or deterrence,
and not solely for compensatory purposes, against a health care
provider or health care institution. Punitive damages are
neither economic nor noneconomic damages.
(16) Recovery.--The term ``recovery'' means the net sum
recovered after deducting any disbursements or costs incurred
in connection with prosecution or settlement of the claim,
including all costs paid or advanced by any person. Costs of
health care incurred by the plaintiff and the attorneys' office
overhead costs or charges for legal services are not deductible
disbursements or costs for such purpose.
(17) State.--The term ``State'' means each of the several
States, the District of Columbia, the Commonwealth of Puerto
Rico, the Virgin Islands, Guam, American Samoa, the Northern
Mariana Islands, the Trust Territory of the Pacific Islands,
and any other territory or possession of the United States, or
any political subdivision thereof.
SEC. 124. ENCOURAGING SPEEDY RESOLUTION OF CLAIMS.
(a) In General.--Except as otherwise provided for in this section,
the time for the commencement of a health care lawsuit shall be 3 years
after the date of manifestation of injury or 1 year after the claimant
discovers, or through the use of reasonable diligence should have
discovered, the injury, whichever occurs first.
(b) General Exception.--The time for the commencement of a health
care lawsuit shall not exceed 3 years after the date of manifestation
of injury unless the tolling of time was delayed as a result of--
(1) fraud;
(2) intentional concealment; or
(3) the presence of a foreign body, which has no
therapeutic or diagnostic purpose or effect, in the person of
the injured person.
(c) Minors.--An action by a minor shall be commenced within 3 years
from the date of the alleged manifestation of injury except that if
such minor is under the full age of 6 years, such action shall be
commenced within 3 years of the manifestation of injury, or prior to
the eighth birthday of the minor, whichever provides a longer period.
Such time limitation shall be tolled for minors for any period during
which a parent or guardian and a health care provider or health care
institution have committed fraud or collusion in the failure to bring
an action on behalf of the injured minor.
(d) Rule 11 Sanctions.--Whenever a Federal or State court
determines (whether by motion of the parties or whether on the motion
of the court) that there has been a violation of rule 11 of the Federal
Rules of Civil Procedure (or a similar violation of applicable State
court rules) in a health care liability action to which this subtitle
applies, the court shall impose upon the attorneys, law firms, or pro
se litigants that have violated rule 11 or are responsible for the
violation, an appropriate sanction, which shall include an order to pay
the other party or parties for the reasonable expenses incurred as a
direct result of the filing of the pleading, motion, or other paper
that is the subject of the violation, including a reasonable attorneys'
fee. Such sanction shall be sufficient to deter repetition of such
conduct or comparable conduct by others similarly situated, and to
compensate the party or parties injured by such conduct.
SEC. 125. COMPENSATING PATIENT INJURY.
(a) Unlimited Amount of Damages for Actual Economic Losses in
Health Care Lawsuits.--In any health care lawsuit, nothing in this
subtitle shall limit the recovery by a claimant of the full amount of
the available economic damages, notwithstanding the limitation
contained in subsection (b).
(b) Additional Noneconomic Damages.--
(1) Health care providers.--In any health care lawsuit
where final judgment is rendered against a health care
provider, the amount of noneconomic damages recovered from the
provider, if otherwise available under applicable Federal or
State law, may be as much as $250,000, regardless of the number
of parties other than a health care institution against whom
the action is brought or the number of separate claims or
actions brought with respect to the same occurrence.
(2) Health care institutions.--
(A) Single institution.--In any health care lawsuit
where final judgment is rendered against a single
health care institution, the amount of noneconomic
damages recovered from the institution, if otherwise
available under applicable Federal or State law, may be
as much as $250,000, regardless of the number of
parties against whom the action is brought or the
number of separate claims or actions brought with
respect to the same occurrence.
(B) Multiple institutions.--In any health care
lawsuit where final judgment is rendered against more
than one health care institution, the amount of
noneconomic damages recovered from each institution, if
otherwise available under applicable Federal or State
law, may be as much as $250,000, regardless of the
number of parties against whom the action is brought or
the number of separate claims or actions brought with
respect to the same occurrence, except that the total
amount recovered from all such institutions in such
lawsuit shall not exceed $500,000.
(c) No Discount of Award for Noneconomic Damages.--In any health
care lawsuit--
(1) an award for future noneconomic damages shall not be
discounted to present value;
(2) the jury shall not be informed about the maximum award
for noneconomic damages under subsection (b);
(3) an award for noneconomic damages in excess of the
limitations provided for in subsection (b) shall be reduced
either before the entry of judgment, or by amendment of the
judgment after entry of judgment, and such reduction shall be
made before accounting for any other reduction in damages
required by law; and
(4) if separate awards are rendered for past and future
noneconomic damages and the combined awards exceed the
limitations described in subsection (b), the future noneconomic
damages shall be reduced first.
(d) Fair Share Rule.--In any health care lawsuit, each party shall
be liable for that party's several share of any damages only and not
for the share of any other person. Each party shall be liable only for
the amount of damages allocated to such party in direct proportion to
such party's percentage of responsibility. A separate judgment shall be
rendered against each such party for the amount allocated to such
party. For purposes of this section, the trier of fact shall determine
the proportion of responsibility of each party for the claimant's harm.
SEC. 126. MAXIMIZING PATIENT RECOVERY.
(a) Court Supervision of Share of Damages Actually Paid to
Claimants.--
(1) In general.--In any health care lawsuit, the court
shall supervise the arrangements for payment of damages to
protect against conflicts of interest that may have the effect
of reducing the amount of damages awarded that are actually
paid to claimants.
(2) Contingency fees.--
(A) In general.--In any health care lawsuit in
which the attorney for a party claims a financial stake
in the outcome by virtue of a contingent fee, the court
shall have the power to restrict the payment of a
claimant's damage recovery to such attorney, and to
redirect such damages to the claimant based upon the
interests of justice and principles of equity.
(B) Limitation.--The total of all contingent fees
for representing all claimants in a health care lawsuit
shall not exceed the following limits:
(i) 40 percent of the first $50,000
recovered by the claimant(s).
(ii) 33\1/3\ percent of the next $50,000
recovered by the claimant(s).
(iii) 25 percent of the next $500,000
recovered by the claimant(s).
(iv) 15 percent of any amount by which the
recovery by the claimant(s) is in excess of
$600,000.
(b) Applicability.--
(1) In general.--The limitations in subsection (a) shall
apply whether the recovery is by judgment, settlement,
mediation, arbitration, or any other form of alternative
dispute resolution.
(2) Minors.--In a health care lawsuit involving a minor or
incompetent person, a court retains the authority to authorize
or approve a fee that is less than the maximum permitted under
this section.
(c) Expert Witnesses.--
(1) Requirement.--No individual shall be qualified to
testify as an expert witness concerning issues of negligence in
any health care lawsuit against a defendant unless such
individual--
(A) except as required under paragraph (2), is a
health care professional who--
(i) is appropriately credentialed or
licensed in 1 or more States to deliver health
care services; and
(ii) typically treats the diagnosis or
condition or provides the type of treatment
under review; and
(B) can demonstrate by competent evidence that, as
a result of training, education, knowledge, and
experience in the evaluation, diagnosis, and treatment
of the disease or injury which is the subject matter of
the lawsuit against the defendant, the individual was
substantially familiar with applicable standards of
care and practice as they relate to the act or omission
which is the subject of the lawsuit on the date of the
incident.
(2) Physician review.--In a health care lawsuit, if the
claim of the plaintiff involved treatment that is recommended
or provided by a physician (allopathic or osteopathic), an
individual shall not be qualified to be an expert witness under
this subsection with respect to issues of negligence concerning
such treatment unless such individual is a physician.
(3) Specialties and subspecialties.--With respect to a
lawsuit described in paragraph (1), a court shall not permit an
expert in one medical specialty or subspecialty to testify
against a defendant in another medical specialty or
subspecialty unless, in addition to a showing of substantial
familiarity in accordance with paragraph (1)(B), there is a
showing that the standards of care and practice in the two
specialty or subspecialty fields are similar.
(4) Limitation.--The limitations in this subsection shall
not apply to expert witnesses testifying as to the degree or
permanency of medical or physical impairment.
SEC. 127. ADDITIONAL HEALTH BENEFITS.
(a) In General.--The amount of any damages received by a claimant
in any health care lawsuit shall be reduced by the court by the amount
of any collateral source benefits to which the claimant is entitled,
less any insurance premiums or other payments made by the claimant (or
by the spouse, parent, child, or legal guardian of the claimant) to
obtain or secure such benefits.
(b) Preservation of Current Law.--Where a payor of collateral
source benefits has a right of recovery by reimbursement or subrogation
and such right is permitted under Federal or State law, subsection (a)
shall not apply.
(c) Application of Provision.--This section shall apply to any
health care lawsuit that is settled or resolved by a fact finder.
SEC. 128. PUNITIVE DAMAGES.
(a) Punitive Damages Permitted.--
(1) In general.--Punitive damages may, if otherwise
available under applicable State or Federal law, be awarded
against any person in a health care lawsuit only if it is
proven by clear and convincing evidence that such person acted
with malicious intent to injure the claimant, or that such
person deliberately failed to avoid unnecessary injury that
such person knew the claimant was substantially certain to
suffer.
(2) Filing of lawsuit.--No demand for punitive damages
shall be included in a health care lawsuit as initially filed.
A court may allow a claimant to file an amended pleading for
punitive damages only upon a motion by the claimant and after a
finding by the court, upon review of supporting and opposing
affidavits or after a hearing, after weighing the evidence,
that the claimant has established by a substantial probability
that the claimant will prevail on the claim for punitive
damages.
(3) Separate proceeding.--At the request of any party in a
health care lawsuit, the trier of fact shall consider in a
separate proceeding--
(A) whether punitive damages are to be awarded and
the amount of such award; and
(B) the amount of punitive damages following a
determination of punitive liability.
If a separate proceeding is requested, evidence relevant only
to the claim for punitive damages, as determined by applicable
State law, shall be inadmissible in any proceeding to determine
whether compensatory damages are to be awarded.
(4) Limitation where no compensatory damages are awarded.--
In any health care lawsuit where no judgment for compensatory
damages is rendered against a person, no punitive damages may
be awarded with respect to the claim in such lawsuit against
such person.
(b) Determining Amount of Punitive Damages.--
(1) Factors considered.--In determining the amount of
punitive damages under this section, the trier of fact shall
consider only the following:
(A) the severity of the harm caused by the conduct
of such party;
(B) the duration of the conduct or any concealment
of it by such party;
(C) the profitability of the conduct to such party;
(D) the number of products sold or medical
procedures rendered for compensation, as the case may
be, by such party, of the kind causing the harm
complained of by the claimant;
(E) any criminal penalties imposed on such party,
as a result of the conduct complained of by the
claimant; and
(F) the amount of any civil fines assessed against
such party as a result of the conduct complained of by
the claimant.
(2) Maximum award.--The amount of punitive damages awarded
in a health care lawsuit may not exceed an amount equal to two
times the amount of economic damages awarded in the lawsuit or
$250,000, whichever is greater. The jury shall not be informed
of the limitation under the preceding sentence.
(c) Liability of Health Care Providers.--
(1) In general.--A health care provider who prescribes, or
who dispenses pursuant to a prescription, a drug, biological
product, or medical device approved by the Food and Drug
Administration, for an approved indication of the drug,
biological product, or medical device, shall not be named as a
party to a product liability lawsuit invoking such drug,
biological product, or medical device and shall not be liable
to a claimant in a class action lawsuit against the
manufacturer, distributor, or product seller of such drug,
biological product, or medical device.
(2) Medical product.--The term ``medical product'' means a
drug or device intended for humans. The terms ``drug'' and
``device'' have the meanings given such terms in sections
201(g)(1) and 201(h) of the Federal Food, Drug and Cosmetic Act
(21 U.S.C. 321), respectively, including any component or raw
material used therein, but excluding health care services.
SEC. 129. AUTHORIZATION OF PAYMENT OF FUTURE DAMAGES TO CLAIMANTS IN
HEALTH CARE LAWSUITS.
(a) In General.--In any health care lawsuit, if an award of future
damages, without reduction to present value, equaling or exceeding
$50,000 is made against a party with sufficient insurance or other
assets to fund a periodic payment of such a judgment, the court shall,
at the request of any party, enter a judgment ordering that the future
damages be paid by periodic payments in accordance with the Uniform
Periodic Payment of Judgments Act promulgated by the National
Conference of Commissioners on Uniform State Laws.
(b) Applicability.--This section applies to all actions which have
not been first set for trial or retrial before the effective date of
this subtitle.
SEC. 130. EFFECT ON OTHER LAWS.
(a) General Vaccine Injury.--
(1) In general.--To the extent that title XXI of the Public
Health Service Act establishes a Federal rule of law applicable
to a civil action brought for a vaccine-related injury or
death--
(A) this subtitle shall not affect the application
of the rule of law to such an action; and
(B) any rule of law prescribed by this subtitle in
conflict with a rule of law of such title XXI shall not
apply to such action.
(2) Exception.--If there is an aspect of a civil action
brought for a vaccine-related injury or death to which a
Federal rule of law under title XXI of the Public Health
Service Act does not apply, then this subtitle or otherwise
applicable law (as determined under this subtitle) will apply
to such aspect of such action.
(b) Smallpox Vaccine Injury.--
(1) In general.--To the extent that part C of title II of
the Public Health Service Act establishes a Federal rule of law
applicable to a civil action brought for a smallpox vaccine-
related injury or death--
(A) this subtitle shall not affect the application
of the rule of law to such an action; and
(B) any rule of law prescribed by this subtitle in
conflict with a rule of law of such part C shall not
apply to such action.
(2) Exception.--If there is an aspect of a civil action
brought for a smallpox vaccine-related injury or death to which
a Federal rule of law under part C of title II of the Public
Health Service Act does not apply, then this subtitle or
otherwise applicable law (as determined under this subtitle)
will apply to such aspect of such action.
(c) Other Federal Law.--Except as provided in this section, nothing
in this subtitle shall be deemed to affect any defense available, or
any limitation on liability that applies to, a defendant in a health
care lawsuit or action under any other provision of Federal law.
SEC. 131. STATE FLEXIBILITY AND PROTECTION OF STATES' RIGHTS.
(a) Health Care Lawsuits.--The provisions governing health care
lawsuits set forth in this subtitle shall preempt, subject to
subsections (b) and (c), State law to the extent that State law
prevents the application of any provisions of law established by or
under this subtitle. The provisions governing health care lawsuits set
forth in this subtitle supersede chapter 171 of title 28, United States
Code, to the extent that such chapter--
(1) provides for a greater amount of damages or contingent
fees, a longer period in which a health care lawsuit may be
commenced, or a reduced applicability or scope of periodic
payment of future damages, than provided in this subtitle; or
(2) prohibits the introduction of evidence regarding
collateral source benefits.
(b) Preemption of Certain State Laws.--No provision of this
subtitle shall be construed to preempt any State law (whether effective
before, on, or after the date of the enactment of this subtitle) that
specifies a particular monetary amount of compensatory or punitive
damages (or the total amount of damages) that may be awarded in a
health care lawsuit, regardless of whether such monetary amount is
greater or lesser than is provided for under this subtitle,
notwithstanding section 125(a).
(c) Protection of States' Rights and Other Laws.--
(1) In general.--Any issue that is not governed by a
provision of law established by or under this subtitle
(including the State standards of negligence) shall be governed
by otherwise applicable Federal or State law.
(2) Rule of construction.--Nothing in this subtitle shall
be construed to--
(A) preempt or supersede any Federal or State law
that imposes greater procedural or substantive
protections (such as a shorter statute of limitations)
for a health care provider or health care institution
from liability, loss, or damages than those provided by
this subtitle;
(B) preempt or supercede any State law that permits
and provides for the enforcement of any arbitration
agreement related to a health care liability claim
whether enacted prior to or after the date of enactment
of this subtitle;
(C) create a cause of action that is not otherwise
available under Federal or State law; or
(D) affect the scope of preemption of any other
Federal law.
SEC. 132. APPLICABILITY; EFFECTIVE DATE.
This subtitle shall apply to any health care lawsuit brought in a
Federal or State court, or subject to an alternative dispute resolution
system, that is initiated on or after the date of the enactment of this
subtitle, except that any health care lawsuit arising from an injury
occurring prior to the date of enactment of this subtitle shall be
governed by the applicable statute of limitations provisions in effect
at the time the injury occurred.
TITLE II--ENHANCEMENT OF INSURANCE MARKETS FOR ALL AMERICANS
Subtitle A--Elimination of Barriers
SEC. 201. SHORT TITLE.
This title may be cited as ``Health Care Choice Act of 2009''.
SEC. 202. SPECIFICATION OF CONSTITUTIONAL AUTHORITY FOR ENACTMENT OF
LAW.
This title is enacted pursuant to the power granted Congress under
article I, section 8, clause 3, of the United States Constitution.
SEC. 203. FINDINGS.
Congress finds the following:
(1) The application of numerous and significant variations
in State law impacts the ability of insurers to offer, and
individuals to obtain, affordable individual health insurance
coverage, thereby impeding commerce in individual health
insurance coverage.
(2) Individual health insurance coverage is increasingly
offered through the Internet, other electronic means, and by
mail, all of which are inherently part of interstate commerce.
(3) In response to these issues, it is appropriate to
encourage increased efficiency in the offering of individual
health insurance coverage through a collaborative approach by
the States in regulating this coverage.
(4) The establishment of risk-retention groups has provided
a successful model for the sale of insurance across State
lines, as the acts establishing those groups allow insurance to
be sold in multiple States but regulated by a single State.
SEC. 204. COOPERATIVE GOVERNING OF INDIVIDUAL HEALTH INSURANCE
COVERAGE.
(a) In General.--Title XXVII of the Public Health Service Act (42
U.S.C. 300gg et seq.) is amended by adding at the end the following new
part:
``PART D--COOPERATIVE GOVERNING OF INDIVIDUAL HEALTH INSURANCE COVERAGE
``SEC. 2795. DEFINITIONS.
``In this part:
``(1) Primary state.--The term `primary State' means, with
respect to individual health insurance coverage offered by a
health insurance issuer, the State designated by the issuer as
the State whose covered laws shall govern the health insurance
issuer in the sale of such coverage under this part. An issuer,
with respect to a particular policy, may only designate one
such State as its primary State with respect to all such
coverage it offers. Such an issuer may not change the
designated primary State with respect to individual health
insurance coverage once the policy is issued, except that such
a change may be made upon renewal of the policy. With respect
to such designated State, the issuer is deemed to be doing
business in that State.
``(2) Secondary state.--The term `secondary State' means,
with respect to individual health insurance coverage offered by
a health insurance issuer, any State that is not the primary
State. In the case of a health insurance issuer that is selling
a policy in, or to a resident of, a secondary State, the issuer
is deemed to be doing business in that secondary State.
``(3) Health insurance issuer.--The term `health insurance
issuer' has the meaning given such term in section 2791(b)(2),
except that such an issuer must be licensed in the primary
State and be qualified to sell individual health insurance
coverage in that State.
``(4) Individual health insurance coverage.--The term
`individual health insurance coverage' means health insurance
coverage offered in the individual market, as defined in
section 2791(e)(1).
``(5) Applicable state authority.--The term `applicable
State authority' means, with respect to a health insurance
issuer in a State, the State insurance commissioner or official
or officials designated by the State to enforce the
requirements of this title for the State with respect to the
issuer.
``(6) Hazardous financial condition.--The term `hazardous
financial condition' means that, based on its present or
reasonably anticipated financial condition, a health insurance
issuer is unlikely to be able--
``(A) to meet obligations to policyholders with
respect to known claims and reasonably anticipated
claims; or
``(B) to pay other obligations in the normal course
of business.
``(7) Covered laws.--
``(A) In general.--The term `covered laws' means
the laws, rules, regulations, agreements, and orders
governing the insurance business pertaining to--
``(i) individual health insurance coverage
issued by a health insurance issuer;
``(ii) the offer, sale, rating (including
medical underwriting), renewal, and issuance of
individual health insurance coverage to an
individual;
``(iii) the provision to an individual in
relation to individual health insurance
coverage of health care and insurance related
services;
``(iv) the provision to an individual in
relation to individual health insurance
coverage of management, operations, and
investment activities of a health insurance
issuer; and
``(v) the provision to an individual in
relation to individual health insurance
coverage of loss control and claims
administration for a health insurance issuer
with respect to liability for which the issuer
provides insurance.
``(B) Exception.--Such term does not include any
law, rule, regulation, agreement, or order governing
the use of care or cost management techniques,
including any requirement related to provider
contracting, network access or adequacy, health care
data collection, or quality assurance.
``(8) State.--The term `State' means the 50 States and
includes the District of Columbia, Puerto Rico, the Virgin
Islands, Guam, American Samoa, and the Northern Mariana
Islands.
``(9) Unfair claims settlement practices.--The term `unfair
claims settlement practices' means only the following
practices:
``(A) Knowingly misrepresenting to claimants and
insured individuals relevant facts or policy provisions
relating to coverage at issue.
``(B) Failing to acknowledge with reasonable
promptness pertinent communications with respect to
claims arising under policies.
``(C) Failing to adopt and implement reasonable
standards for the prompt investigation and settlement
of claims arising under policies.
``(D) Failing to effectuate prompt, fair, and
equitable settlement of claims submitted in which
liability has become reasonably clear.
``(E) Refusing to pay claims without conducting a
reasonable investigation.
``(F) Failing to affirm or deny coverage of claims
within a reasonable period of time after having
completed an investigation related to those claims.
``(G) A pattern or practice of compelling insured
individuals or their beneficiaries to institute suits
to recover amounts due under its policies by offering
substantially less than the amounts ultimately
recovered in suits brought by them.
``(H) A pattern or practice of attempting to settle
or settling claims for less than the amount that a
reasonable person would believe the insured individual
or his or her beneficiary was entitled by reference to
written or printed advertising material accompanying or
made part of an application.
``(I) Attempting to settle or settling claims on
the basis of an application that was materially altered
without notice to, or knowledge or consent of, the
insured.
``(J) Failing to provide forms necessary to present
claims within 15 calendar days of a requests with
reasonable explanations regarding their use.
``(K) Attempting to cancel a policy in less time
than that prescribed in the policy or by the law of the
primary State.
``(10) Fraud and abuse.--The term `fraud and abuse' means
an act or omission committed by a person who, knowingly and
with intent to defraud, commits, or conceals any material
information concerning, one or more of the following:
``(A) Presenting, causing to be presented or
preparing with knowledge or belief that it will be
presented to or by an insurer, a reinsurer, broker or
its agent, false information as part of, in support of
or concerning a fact material to one or more of the
following:
``(i) An application for the issuance or
renewal of an insurance policy or reinsurance
contract.
``(ii) The rating of an insurance policy or
reinsurance contract.
``(iii) A claim for payment or benefit
pursuant to an insurance policy or reinsurance
contract.
``(iv) Premiums paid on an insurance policy
or reinsurance contract.
``(v) Payments made in accordance with the
terms of an insurance policy or reinsurance
contract.
``(vi) A document filed with the
commissioner or the chief insurance regulatory
official of another jurisdiction.
``(vii) The financial condition of an
insurer or reinsurer.
``(viii) The formation, acquisition,
merger, reconsolidation, dissolution or
withdrawal from one or more lines of insurance
or reinsurance in all or part of a State by an
insurer or reinsurer.
``(ix) The issuance of written evidence of
insurance.
``(x) The reinstatement of an insurance
policy.
``(B) Solicitation or acceptance of new or renewal
insurance risks on behalf of an insurer reinsurer or
other person engaged in the business of insurance by a
person who knows or should know that the insurer or
other person responsible for the risk is insolvent at
the time of the transaction.
``(C) Transaction of the business of insurance in
violation of laws requiring a license, certificate of
authority, or other legal authority for the transaction
of the business of insurance.
``(D) Attempt to commit, aiding or abetting in the
commission of, or conspiracy to commit the acts or
omissions specified in this paragraph.
``SEC. 2796. APPLICATION OF LAW.
``(a) In General.--The covered laws of the primary State shall
apply to individual health insurance coverage offered by a health
insurance issuer in the primary State and in any secondary State, but
only if the coverage and issuer comply with the conditions of this
section with respect to the offering of coverage in any secondary
State.
``(b) Exemptions From Covered Laws in a Secondary State.--Except as
provided in this section, a health insurance issuer with respect to its
offer, sale, rating (including medical underwriting), renewal, and
issuance of individual health insurance coverage in any secondary State
is exempt from any covered laws of the secondary State (and any rules,
regulations, agreements, or orders sought or issued by such State under
or related to such covered laws) to the extent that such laws would--
``(1) make unlawful, or regulate, directly or indirectly,
the operation of the health insurance issuer operating in the
secondary State, except that any secondary State may require
such an issuer--
``(A) to pay, on a nondiscriminatory basis,
applicable premium and other taxes (including high risk
pool assessments) which are levied on insurers and
surplus lines insurers, brokers, or policyholders under
the laws of the State;
``(B) to register with and designate the State
insurance commissioner as its agent solely for the
purpose of receiving service of legal documents or
process;
``(C) to submit to an examination of its financial
condition by the State insurance commissioner in any
State in which the issuer is doing business to
determine the issuer's financial condition, if--
``(i) the State insurance commissioner of
the primary State has not done an examination
within the period recommended by the National
Association of Insurance Commissioners; and
``(ii) any such examination is conducted in
accordance with the examiners' handbook of the
National Association of Insurance Commissioners
and is coordinated to avoid unjustified
duplication and unjustified repetition;
``(D) to comply with a lawful order issued--
``(i) in a delinquency proceeding commenced
by the State insurance commissioner if there
has been a finding of financial impairment
under subparagraph (C); or
``(ii) in a voluntary dissolution
proceeding;
``(E) to comply with an injunction issued by a
court of competent jurisdiction, upon a petition by the
State insurance commissioner alleging that the issuer
is in hazardous financial condition;
``(F) to participate, on a nondiscriminatory basis,
in any insurance insolvency guaranty association or
similar association to which a health insurance issuer
in the State is required to belong;
``(G) to comply with any State law regarding fraud
and abuse (as defined in section 2795(10)), except that
if the State seeks an injunction regarding the conduct
described in this subparagraph, such injunction must be
obtained from a court of competent jurisdiction;
``(H) to comply with any State law regarding unfair
claims settlement practices (as defined in section
2795(9)); or
``(I) to comply with the applicable requirements
for independent review under section 2798 with respect
to coverage offered in the State;
``(2) require any individual health insurance coverage
issued by the issuer to be countersigned by an insurance agent
or broker residing in that Secondary State; or
``(3) otherwise discriminate against the issuer issuing
insurance in both the primary State and in any secondary State.
``(c) Clear and Conspicuous Disclosure.--A health insurance issuer
shall provide the following notice, in 12-point bold type, in any
insurance coverage offered in a secondary State under this part by such
a health insurance issuer and at renewal of the policy, with the 5
blank spaces therein being appropriately filled with the name of the
health insurance issuer, the name of primary State, the name of the
secondary State, the name of the secondary State, and the name of the
secondary State, respectively, for the coverage concerned:
```This policy is issued by _____ and is governed by the laws and
regulations of the State of _____, and it has met all the laws of that
State as determined by that State's Department of Insurance. This
policy may be less expensive than others because it is not subject to
all of the insurance laws and regulations of the State of _____,
including coverage of some services or benefits mandated by the law of
the State of _____. Additionally, this policy is not subject to all of
the consumer protection laws or restrictions on rate changes of the
State of _____. As with all insurance products, before purchasing this
policy, you should carefully review the policy and determine what
health care services the policy covers and what benefits it provides,
including any exclusions, limitations, or conditions for such services
or benefits.'
``(d) Prohibition on Certain Reclassifications and Premium
Increases.--
``(1) In general.--For purposes of this section, a health
insurance issuer that provides individual health insurance
coverage to an individual under this part in a primary or
secondary State may not upon renewal--
``(A) move or reclassify the individual insured
under the health insurance coverage from the class such
individual is in at the time of issue of the contract
based on the health-status related factors of the
individual; or
``(B) increase the premiums assessed the individual
for such coverage based on a health status-related
factor or change of a health status-related factor or
the past or prospective claim experience of the insured
individual.
``(2) Construction.--Nothing in paragraph (1) shall be
construed to prohibit a health insurance issuer--
``(A) from terminating or discontinuing coverage or
a class of coverage in accordance with subsections (b)
and (c) of section 2742;
``(B) from raising premium rates for all policy
holders within a class based on claims experience;
``(C) from changing premiums or offering discounted
premiums to individuals who engage in wellness
activities at intervals prescribed by the issuer, if
such premium changes or incentives--
``(i) are disclosed to the consumer in the
insurance contract;
``(ii) are based on specific wellness
activities that are not applicable to all
individuals; and
``(iii) are not obtainable by all
individuals to whom coverage is offered;
``(D) from reinstating lapsed coverage; or
``(E) from retroactively adjusting the rates
charged an insured individual if the initial rates were
set based on material misrepresentation by the
individual at the time of issue.
``(e) Prior Offering of Policy in Primary State.--A health
insurance issuer may not offer for sale individual health insurance
coverage in a secondary State unless that coverage is currently offered
for sale in the primary State.
``(f) Licensing of Agents or Brokers for Health Insurance
Issuers.--Any State may require that a person acting, or offering to
act, as an agent or broker for a health insurance issuer with respect
to the offering of individual health insurance coverage obtain a
license from that State, with commissions or other compensation subject
to the provisions of the laws of that State, except that a State may
not impose any qualification or requirement which discriminates against
a nonresident agent or broker.
``(g) Documents for Submission to State Insurance Commissioner.--
Each health insurance issuer issuing individual health insurance
coverage in both primary and secondary States shall submit--
``(1) to the insurance commissioner of each State in which
it intends to offer such coverage, before it may offer
individual health insurance coverage in such State--
``(A) a copy of the plan of operation or
feasibility study or any similar statement of the
policy being offered and its coverage (which shall
include the name of its primary State and its principal
place of business);
``(B) written notice of any change in its
designation of its primary State; and
``(C) written notice from the issuer of the
issuer's compliance with all the laws of the primary
State; and
``(2) to the insurance commissioner of each secondary State
in which it offers individual health insurance coverage, a copy
of the issuer's quarterly financial statement submitted to the
primary State, which statement shall be certified by an
independent public accountant and contain a statement of
opinion on loss and loss adjustment expense reserves made by--
``(A) a member of the American Academy of
Actuaries; or
``(B) a qualified loss reserve specialist.
``(h) Power of Courts To Enjoin Conduct.--Nothing in this section
shall be construed to affect the authority of any Federal or State
court to enjoin--
``(1) the solicitation or sale of individual health
insurance coverage by a health insurance issuer to any person
or group who is not eligible for such insurance; or
``(2) the solicitation or sale of individual health
insurance coverage that violates the requirements of the law of
a secondary State which are described in subparagraphs (A)
through (H) of section 2796(b)(1).
``(i) Power of Secondary States To Take Administrative Action.--
Nothing in this section shall be construed to affect the authority of
any State to enjoin conduct in violation of that State's laws described
in section 2796(b)(1).
``(j) State Powers To Enforce State Laws.--
``(1) In general.--Subject to the provisions of subsection
(b)(1)(G) (relating to injunctions) and paragraph (2), nothing
in this section shall be construed to affect the authority of
any State to make use of any of its powers to enforce the laws
of such State with respect to which a health insurance issuer
is not exempt under subsection (b).
``(2) Courts of competent jurisdiction.--If a State seeks
an injunction regarding the conduct described in paragraphs (1)
and (2) of subsection (h), such injunction must be obtained
from a Federal or State court of competent jurisdiction.
``(k) States' Authority To Sue.--Nothing in this section shall
affect the authority of any State to bring action in any Federal or
State court.
``(l) Generally Applicable Laws.--Nothing in this section shall be
construed to affect the applicability of State laws generally
applicable to persons or corporations.
``(m) Guaranteed Availability of Coverage to HIPAA Eligible
Individuals.--To the extent that a health insurance issuer is offering
coverage in a primary State that does not accommodate residents of
secondary States or does not provide a working mechanism for residents
of a secondary State, and the issuer is offering coverage under this
part in such secondary State which has not adopted a qualified high
risk pool as its acceptable alternative mechanism (as defined in
section 2744(c)(2)), the issuer shall, with respect to any individual
health insurance coverage offered in a secondary State under this part,
comply with the guaranteed availability requirements for eligible
individuals in section 2741.
``SEC. 2797. PRIMARY STATE MUST MEET FEDERAL FLOOR BEFORE ISSUER MAY
SELL INTO SECONDARY STATES.
``A health insurance issuer may not offer, sell, or issue
individual health insurance coverage in a secondary State if the State
insurance commissioner does not use a risk-based capital formula for
the determination of capital and surplus requirements for all health
insurance issuers.
``SEC. 2798. INDEPENDENT EXTERNAL APPEALS PROCEDURES.
``(a) Right to External Appeal.--A health insurance issuer may not
offer, sell, or issue individual health insurance coverage in a
secondary State under the provisions of this title unless--
``(1) both the secondary State and the primary State have
legislation or regulations in place establishing an independent
review process for individuals who are covered by individual
health insurance coverage, or
``(2) in any case in which the requirements of subparagraph
(A) are not met with respect to the either of such States, the
issuer provides an independent review mechanism substantially
identical (as determined by the applicable State authority of
such State) to that prescribed in the `Health Carrier External
Review Model Act' of the National Association of Insurance
Commissioners for all individuals who purchase insurance
coverage under the terms of this part, except that, under such
mechanism, the review is conducted by an independent medical
reviewer, or a panel of such reviewers, with respect to whom
the requirements of subsection (b) are met.
``(b) Qualifications of Independent Medical Reviewers.--In the case
of any independent review mechanism referred to in subsection (a)(2)--
``(1) In general.--In referring a denial of a claim to an
independent medical reviewer, or to any panel of such
reviewers, to conduct independent medical review, the issuer
shall ensure that--
``(A) each independent medical reviewer meets the
qualifications described in paragraphs (2) and (3);
``(B) with respect to each review, each reviewer
meets the requirements of paragraph (4) and the
reviewer, or at least 1 reviewer on the panel, meets
the requirements described in paragraph (5); and
``(C) compensation provided by the issuer to each
reviewer is consistent with paragraph (6).
``(2) Licensure and expertise.--Each independent medical
reviewer shall be a physician (allopathic or osteopathic) or
health care professional who--
``(A) is appropriately credentialed or licensed in
1 or more States to deliver health care services; and
``(B) typically treats the condition, makes the
diagnosis, or provides the type of treatment under
review.
``(3) Independence.--
``(A) In general.--Subject to subparagraph (B),
each independent medical reviewer in a case shall--
``(i) not be a related party (as defined in
paragraph (7));
``(ii) not have a material familial,
financial, or professional relationship with
such a party; and
``(iii) not otherwise have a conflict of
interest with such a party (as determined under
regulations).
``(B) Exception.--Nothing in subparagraph (A) shall
be construed to--
``(i) prohibit an individual, solely on the
basis of affiliation with the issuer, from
serving as an independent medical reviewer if--
``(I) a non-affiliated individual
is not reasonably available;
``(II) the affiliated individual is
not involved in the provision of items
or services in the case under review;
``(III) the fact of such an
affiliation is disclosed to the issuer
and the enrollee (or authorized
representative) and neither party
objects; and
``(IV) the affiliated individual is
not an employee of the issuer and does
not provide services exclusively or
primarily to or on behalf of the
issuer;
``(ii) prohibit an individual who has staff
privileges at the institution where the
treatment involved takes place from serving as
an independent medical reviewer merely on the
basis of such affiliation if the affiliation is
disclosed to the issuer and the enrollee (or
authorized representative), and neither party
objects; or
``(iii) prohibit receipt of compensation by
an independent medical reviewer from an entity
if the compensation is provided consistent with
paragraph (6).
``(4) Practicing health care professional in same field.--
``(A) In general.--In a case involving treatment,
or the provision of items or services--
``(i) by a physician, a reviewer shall be a
practicing physician (allopathic or
osteopathic) of the same or similar specialty,
as a physician who, acting within the
appropriate scope of practice within the State
in which the service is provided or rendered,
typically treats the condition, makes the
diagnosis, or provides the type of treatment
under review; or
``(ii) by a non-physician health care
professional, the reviewer, or at least 1
member of the review panel, shall be a
practicing non-physician health care
professional of the same or similar specialty
as the non-physician health care professional
who, acting within the appropriate scope of
practice within the State in which the service
is provided or rendered, typically treats the
condition, makes the diagnosis, or provides the
type of treatment under review.
``(B) Practicing defined.--For purposes of this
paragraph, the term `practicing' means, with respect to
an individual who is a physician or other health care
professional, that the individual provides health care
services to individual patients on average at least 2
days per week.
``(5) Pediatric expertise.--In the case of an external
review relating to a child, a reviewer shall have expertise
under paragraph (2) in pediatrics.
``(6) Limitations on reviewer compensation.--Compensation
provided by the issuer to an independent medical reviewer in
connection with a review under this section shall--
``(A) not exceed a reasonable level; and
``(B) not be contingent on the decision rendered by
the reviewer.
``(7) Related party defined.--For purposes of this section,
the term `related party' means, with respect to a denial of a
claim under a coverage relating to an enrollee, any of the
following:
``(A) The issuer involved, or any fiduciary,
officer, director, or employee of the issuer.
``(B) The enrollee (or authorized representative).
``(C) The health care professional that provides
the items or services involved in the denial.
``(D) The institution at which the items or
services (or treatment) involved in the denial are
provided.
``(E) The manufacturer of any drug or other item
that is included in the items or services involved in
the denial.
``(F) Any other party determined under any
regulations to have a substantial interest in the
denial involved.
``(8) Definitions.--For purposes of this subsection:
``(A) Enrollee.--The term `enrollee' means, with
respect to health insurance coverage offered by a
health insurance issuer, an individual enrolled with
the issuer to receive such coverage.
``(B) Health care professional.--The term `health
care professional' means an individual who is licensed,
accredited, or certified under State law to provide
specified health care services and who is operating
within the scope of such licensure, accreditation, or
certification.
``SEC. 2799. ENFORCEMENT.
``(a) In General.--Subject to subsection (b), with respect to
specific individual health insurance coverage the primary State for
such coverage has sole jurisdiction to enforce the primary State's
covered laws in the primary State and any secondary State.
``(b) Secondary State's Authority.--Nothing in subsection (a) shall
be construed to affect the authority of a secondary State to enforce
its laws as set forth in the exception specified in section 2796(b)(1).
``(c) Court Interpretation.--In reviewing action initiated by the
applicable secondary State authority, the court of competent
jurisdiction shall apply the covered laws of the primary State.
``(d) Notice of Compliance Failure.--In the case of individual
health insurance coverage offered in a secondary State that fails to
comply with the covered laws of the primary State, the applicable State
authority of the secondary State may notify the applicable State
authority of the primary State.''.
(b) Effective Date.--The amendment made by subsection (a) shall
apply to individual health insurance coverage offered, issued, or sold
after the date that is one year after the date of the enactment of this
Act.
(c) GAO Ongoing Study and Reports.--
(1) Study.--The Comptroller General of the United States
shall conduct an ongoing study concerning the effect of the
amendment made by subsection (a) on--
(A) the number of uninsured and under-insured;
(B) the availability and cost of health insurance
policies for individuals with pre-existing medical
conditions;
(C) the availability and cost of health insurance
policies generally;
(D) the elimination or reduction of different types
of benefits under health insurance policies offered in
different States; and
(E) cases of fraud or abuse relating to health
insurance coverage offered under such amendment and the
resolution of such cases.
(2) Annual reports.--The Comptroller General shall submit
to Congress an annual report, after the end of each of the 5
years following the effective date of the amendment made by
subsection (a), on the ongoing study conducted under paragraph
(1).
SEC. 205. SEVERABILITY.
If any provision of the Act or the application of such provision to
any person or circumstance is held to be unconstitutional, the
remainder of this Act and the application of the provisions of such to
any other person or circumstance shall not be affected.
Subtitle B--Pre-existing Condition
SEC. 211. BLOCK GRANTS TO STATES.
(a) In General.--The Secretary of Health and Human Services
(referred to in this section as the ``Secretary'') shall award block
grants to States to provide for the development of innovative models
that ensure affordable health insurance coverage for Americans with
pre-existing health conditions.
(b) Application.--To be eligible to receive a grant under this
section a State shall submit to the Secretary an application, at such
time, in such manner, and containing such information as the Secretary
may require.
(c) Use of Funds.--A State shall use amounts received under a grant
under this section to develop innovative programs that ensure the
provision of affordable health insurance coverage for eligible
individuals with pre-existing health conditions. Such models may
include the development and funding of State high-risk pools and the
enhancement of funding for existing State high risk pools.
(d) Eligibility.--To be eligible to participate in a program
developed under subsection (c), an individual shall--
(1) be a resident of the State involved;
(2) provide assurances to the Secretary that activities
carried out under the grant will not result in an increase in
health insurance premiums for residents of the State; and
(3) comply with any other requirements established by the
State.
(e) Amount of Grant.--The amount of a grant to a State under this
section shall be determined by the Secretary.
(f) Authorization of Appropriations.--There is authorized to be
appropriated to carry out this section, $5,000,000,000 for each of the
fiscal years 2010 through 2014.
(g) Definition.--In this section, the term ``pre-existing
condition'' means a medical or other condition in an individual that
exists prior to the date on which such individuals attempts to enroll
in health insurance coverage, whether or not any medical advice,
diagnosis, care, or treatment was recommended or received before such
date.
TITLE III--EMPOWERING THE HEALTH CARE CONSUMER
SEC. 301. ENHANCING THE PATIENT-PROVIDER RELATIONSHIP.
(a) Provision of Information.--The Secretary of Health and Human
Services shall promulgate regulations under which a health care
provider (including a hospital) that receives reimbursement under title
XVIII or XIX of the Social Security Act (42 U.S.C. 1395 and 1396 et
seq.) shall be required to provide each patient of such provider (or
hospital), upon the request of such patient, price information with
respect to the items or services provided (or that will be provided) to
such patient.
(b) Requirement.--The pricing information required under subsection
(a) shall be broken down into the following categories:
(1) The usual and customary price charged for the item or
service involved.
(2) The amount that would be provided as reimbursement
under the Medicare and Medicaid Programs under titles XVIII and
XIX of the Social Security Act (42 U.S.C. 1395 and 1396 et
seq.) for the items or services involved.
(3) The average amount that would be paid by an insured
individual with respect to such item or service.
SEC. 302. HEALTH INSURANCE POLICY INFORMATION.
(a) In General.--A group health plan, or health insurance issuer in
connection with group or individual health insurance coverage, shall
provide an enrollee, upon the request of the enrollee, with information
concerning their allowable payment for items or services under the plan
or coverage involved.
(b) Fee.--A plan or issuer may assess an enrollee a reasonable fee
to cover the costs incurred by the plan or issuer in providing the
enrollee with the information requested under subsection (a).
(c) Definitions.--The definitions contained in section 2791 of the
Public Health Service Act (42 U.S.C. 300gg-91) shall apply for purposes
of this section.
TITLE IV--FUNDING
SEC. 401. FUNDING PROVISIONS.
(a) Termination of TARP Program.--Notwithstanding any provision of
the Emergency Economic Stabilization Act of 2008 (12 U.S.C. 5201 et
seq.) or any other provision of law, the Secretary of Treasury may not,
on and after the date of enactment of this Act, make any payment or
obligation under the Emergency Economic Stabilization Act of 2008 (12
U.S.C. 5201 et seq.). Any funds made available under such Act that have
not been obligated shall be rescinded and made available to carry out
this Act.
(b) Collecting Funds.--Notwithstanding any other provision of the
Emergency Economic Stabilization Act of 2008 (12 U.S.C. 5201 et seq.)
or any other provision of law, the Secretary of Treasury shall collect
all revenues relating to, and proceeds from the sale of, obligations
purchased and made under the Emergency Economic Stabilization Act of
2008 (12 U.S.C. 5201 et seq.) by not later than September 30, 2014, at
a rate of not less than 20 percent per year of the total obligations
purchased and made under such Act.
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