[Congressional Record Volume 142, Number 85 (Tuesday, June 11, 1996)]
[Senate]
[Pages S6082-S6104]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS
By Mr. DOLE (for himself, Mr. Roth, Mr. Simpson, Mr. Pressler,
Mr. Hatch, Mr. Chafee, Mr. Murkowski, and Mr. Cochran):
S. 1856. A bill to establish a commission to study and provide
recommendations on restoring solvency in the Medicare program under
title XVIII of the Social Security Act; to the Committee on Finance.
the medicare restoration act
Mr. DOLE. Mr. President, last Wednesday the Medicare trustees
released their report on the state of the Medicare trust fund, and the
report was grim. Instead of going bankrupt in 2002, as they previously
forecasted, the
[[Page S6083]]
trustees conclude that Medicare will go bankrupt in 2001--just 5 years
from now.
For the past year and a half, this Republican Congress has attempted
to deal honestly and forthrightly with the impending Medicare meltdown.
We put forward a budget that would protect, preserve, and strengthen
Medicare by reducing its unsustainable rate of growth, while still
allowing for a healthy growth rate.
We did not claim that our plan was perfect or that it solved the
long-term problem. But it was a real attempt to alleviate a crisis that
will immediately impact 37 million seniors and disabled Americans, and
will have repercussions on tens of millions more.
In May 1995, I called for a bipartisan Commission to be set up to
save Medicare similar to the one that saved Social Security.
Unfortunately the White House dismissed the idea and decided to attack
Republican plans to save the Medicare system.
That is why I rise today to introduce the Medicare Restoration Act to
establish a blue-ribbon bipartisan advisory commission to help deal
with this crisis.
In my view, leadership means more than just talking about problems.
It also means doing something to solve them.
This Commission will be responsible for reviewing the current, short-
term and long-term condition of the Medicare Trust funds. The
Commission will be composed of 15 members appointed by the President,
Senate, and House of Representatives. The members of this commission
will be from both political parties, because it is clear to me that if
we are to be successful we must put politics aside and work on a
bipartisan basis.
Unfortunately, President Clinton has been unwilling to do that.
In February 1995, President Clinton submitted a budget that contained
no provisions for saving Medicare.
In April 1995, the Medicare trustees--three of whom are members of
his administration--issued their original report and urged ``prompt,
effective and decisive action.'' The administration instead chose to
attack Republican plans to save the system.
Last March, the President submitted a budget which, according to the
Congressional Budget Office, would only stave off Medicare's bankruptcy
for one more year.
It is an undeniable fact that the Republican proposal allowed
Medicare spending per beneficiary to increase from $4,800 per person to
$7,200 per person over 7 years.
It is also an undeniable fact that in their ill-fated health care
reform proposal, the Clinton administration advocated slowing
Medicare's rate of growth.
Despite these facts, however, the President vetoed our Medicare
proposal, and we have heard nothing but attacks on Republicans for
slashing and cutting Medicare.
And when the President was asked, not long ago at a news conference,
why he continued to use these terms even though they are not true, his
response was essentially that the media made him do it.
With the release of the trustee's report, the inescapable conclusion
is that while the rhetoric flew, Medicare was put at further risk.
And those who say that talk is cheap should know that 18 months of
misleading rhetoric may have gained one side points in the opinion
polls, it also put Medicare another $90 billion-plus in the red.
The bottom line is that the 37 million Americans who depend on
Medicare deserve better. Future generations of Americans who will need
Medicare deserve better.
I call on the President to come forward and support this bipartisan
commission so we can preserve the Medicare Program and to join with
Republicans on a bipartisan basis, as I have proposed before, to
address this very serious problem.
I send the bill to the desk and ask it be appropriately referred. It
is cosponsored by Senators Roth, Simpson, Pressler, Hatch, Chafee, and
Murkowski, who are on the Senate Finance Committee. I certainly welcome
additional cosponsors on either side of the aisle. This will be a
bipartisan commission.
Mr. President, I ask unanimous consent that the text of the bill be
printed in the Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:
S. 1856
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 ``Medicare Restoration Act of
1996''.
SEC. 2. ESTABLISHMENT.
There is established a commission to be known as the
National Commission on Medicare Reform (referred to in this
Act as the ``Commission'').
SEC. 3. FINDINGS.
The Congress finds that--
(1) the medicare program under title XVIII of the Social
Security Act provides essential health care insurance to this
Nation's senior citizens and to individuals with
disabilities;
(2) the Federal Hospital Insurance Trust Fund will be
bankrupt in the year 2001, and faces even greater solvency
problems in the long-run with the aging of the baby boom
generation;
(3) the trustees of the trust funds of the medicare program
have reported that growth in spending within the Federal
Supplementary Medical Insurance Trust Fund is unsustainable;
and
(4) expeditious action is needed in order to restore the
fiscal health of the medicare program and to maintain this
Nation's commitment to senior citizens and to individuals
with disabilities.
SEC. 4. DUTIES OF THE COMMISSION.
The Commission shall--
(1) review relevant analyses of the current, short-term,
and long-term financial condition of the Federal Hospital
Insurance Trust Fund and the Federal Supplementary Medical
Insurance Trust Fund under title XVIII of the Social Security
Act;
(2) identify problems that threaten the solvency of such
trust funds;
(3) analyze potential solutions to such problems that will
both assure the financial integrity of the medicare program
under such title and the provision of appropriate benefits
under such program;
(4) make recommendations to restore the short-range and
long-range solvency of the Federal Hospital Insurance Trust
Fund, to provide for sustainable growth of the Supplementary
Medical Insurance Trust Fund, and on related matters as the
Commission deems appropriate; and
(5) review and analyze such other matters as the Commission
deems appropriate.
SEC. 5. MEMBERSHIP.
(a) Number and Appointment.--The Commission shall be
composed of 15 members, of whom--
(1) five shall be appointed by the President, of whom not
more than 3 shall be of the same political party;
(2) five shall be appointed by the Majority Leader of the
Senate, in consultation with the Minority Leader of the
Senate, of whom not more than 3 shall be of the same
political party; and
(3) five shall be appointed by the Speaker of the House of
Representatives, in consultation with the Minority Leader of
the House of Representatives, of whom not more than 3 shall
be of the same political party.
(b) Comptroller General.--The Comptroller General of the
United States shall advise the Commission on the methodology
to be used in identifying problems and analyzing potential
solutions in accordance with section 4.
(c) Term of Appointment.--The members shall serve on the
Commission for the life of the Commission.
(d) Meetings.--The Commission shall locate its headquarters
in the District of Columbia, and shall meet at the call of
the Chairperson.
(e) Quorum.--Ten members of the Commission shall constitute
a quorum, but a lesser number may hold hearings.
(f) Chairperson and Vice Chairperson.--Not later than 15
days after all the members of the Commission are appointed,
such members shall designate a Chairperson and Vice
Chairperson from among the members of the Commission.
(g) Vacancies.--A vacancy on the Commission shall be filled
in the manner in which the original appointment was made not
later than 30 days after the Commission is given notice of
the vacancy.
(h) Compensation.--Members of the Commission shall receive
no additional pay, allowances, or benefits by reason of their
service on the Commission.
(i) Expenses.--Each member of the Commission shall receive
travel expenses and per diem in lieu of subsistence in
accordance with sections 5702 and 5703 of title 5, United
States Code.
SEC. 6. STAFF AND SUPPORT SERVICES.
(a) Director.--
(1) Appointment.--Upon consultation with the members of the
Commission, the Chairperson shall appoint a Director of the
Commission.
(2) Compensation.--The Director shall be paid the rate of
basic pay for level V of the Executive Schedule.
(b) Staff.--With the approval of the Commission, the
Director may appoint such personnel as the Director considers
appropriate.
(c) Applicability of Civil Service Laws.--The staff of the
Commission shall be appointed without regard to the
provisions of
[[Page S6084]]
title 5, United States Code, governing appointments in the
competitive service, and shall be paid without regard to the
provisions of chapter 51 and subchapter III of chapter 53 of
such title relating to classification and General Schedule
pay rates.
(d) Experts and Consultants.--With the approval of the
Commission, the Director may procure temporary and
intermittent services under section 3109(b) of title 5,
United States Code.
(e) Staff of Federal Agencies.--Upon the request of the
Commission, the head of any Federal agency may detail any of
the personnel of such agency to the Commission to assist in
carrying out the duties of the Commission.
(f) Other Resources.--The Commission shall have reasonable
access to materials, resources, statistical data, and other
information from the Library of Congress and agencies and
elected representatives of the executive and legislative
branches of the Federal Government. The Chairperson of the
Commission shall make requests for such access in writing
when necessary.
(g) Physical Facilities.--The Administrator of the General
Services Administration shall locate suitable office space
for the operation of the Commission. The facilities shall
serve as the headquarters of the Commission and shall include
all necessary equipment and incidentals required for the
proper functioning of the Commission.
SEC. 7. POWERS OF COMMISSION.
(a) Hearings.--The Commission may conduct public hearings
or forums at the discretion of the Commission, at any time
and place the Commission is able to secure facilities and
witnesses, for the purpose of carrying out the duties of the
Commission.
(b) Delegation of Authority.--Any member or agent of the
Commission may, if authorized by the Commission, take any
action the Commission is authorized to take by this section.
(c) Gifts, Bequests, and Devises.--The Commission may
accept, use, and dispose of gifts, bequests, or devises of
services or property, both real and personal, for the purpose
of aiding or facilitating the work of the Commission. Gifts,
bequests, or devises of money and proceeds from sales of
other property received as gifts, bequests, or devises shall
be deposited in the Treasury and shall be available for
disbursement upon order of the Commission.
(d) Mails.--The Commission may use the United States mails
in the same manner and under the same conditions as other
Federal agencies.
SEC. 8. REPORTS.
Not later than June 30, 1997, the Commission shall submit a
report to the President and to the Congress on the findings
and conclusions of the Commission.
SEC. 9. TERMINATION.
The Commission shall terminate on the date which is 30 days
after the date the Commission submits its report to the
President and to the Congress under section 8.
SEC. 10. FUNDING.
The Secretary of Health and Human Services shall provide to
the Commission, out of funds otherwise available to such
Secretary, such sums as are necessary to carry out the
purposes of the Commission.
Mr. ROTH. Mr. President, I rise as a cosponsor of legislation
introduced by the majority leader to establish a National Commission on
Medicare Reform.
According to the Medicare trustees' report released last Wednesday,
June 5, the Medicare hospital insurance trust fund will be bankrupt
earlier than expected. In fact, the trustees, of which three of the six
trustees are members of President Clinton's Cabinet, indicate that the
trust fund may run out of money as early as calendar year 2000.
Senator Dole's proposal is consistent with the recommendations of the
Medicare trustees. The trustees recommend:
* * * the establishment of a national advisory group to
examine the Medicare Program. The advisory group would
collect and disseminate information and help develop
recommendations for effective solutions to the long-term
financing problem. This work will be of critical importance
to the administration, the Congress and the American public
in the extensive national discussion that any changes would
require.
We are now 2 years closer to insolvency of the Medicare trust fund
than we were at this time last year. We lost a year trying to address
the problem, and the program is 1 more year closer to bankruptcy than
we expected. Yet, I regret, we are miles away from reaching an
agreement on a solution.
Given the very short time that Medicare will remain solvent, and
given the large number of baby boomers who will be joining the Medicare
Program in just a few years, we cannot afford more delay. It is time to
put politics aside and find a solution.
What is happening to the Medicare trust fund is pretty basic. The
program is paying out more than it is taking in. This simple dynamic,
if left unchecked, will lead Medicare to bankruptcy in less than 5
years. And, simply put, bankruptcy of the trust fund means there will
not be money to pay the hospital bills of our senior citizens and
disabled individuals reliant on Medicare.
Again, I believe it is time to put politics aside. A Medicare Reform
Commission is an important step in the right direction to bringing
together a bipartisan, lasting agreement on resolving Medicare's fiscal
crisis.
The 1983 National Commission on Social Security Reform was an
essential catalyst to resolving the then-looming bankruptcy of Social
Security. The 1983 Commission brought together people in a cooperative
bipartisan spirit. Ultimately, the work of the Commission laid the
ground for a solution to the solvency crisis. I believe a Medicare
Reform Commission might be able to do the same today.
We are facing a crisis. A crisis requires action. We cannot be a
government of empty promises. We must restore Medicare to robust health
for our children and our grandchildren.
______
By Mr. DOLE:
S. 1857. A bill to establish a bipartisan commission on campaign
practices and provide that its recommendations be given expedited
consideration; to the Committee on Rules and Administration.
the bipartisan campaign practices commission act of 1996
Mr. DOLE. Mr. President, as I prepare to leave an institution in
which I have served for over 35 years, I am mindful that in many ways
the public has lost confidence in the ability of legislators to
represent their interests, not special interests.
We should not allow this to continue. Representative Democracy,
founded on fair and competitive elections, is at the core of what makes
America great. Yet, concern over how we finance elections threatens to
erode the trust the American people have in our elected officials.
As my colleagues know, Congress has tried repeatedly to grapple with
this issue and largely failed. However, I continue to believe that the
very nature of the problem makes it difficult to resolve in the normal
give and take of the legislative process.
In 1990, for example, Senator Mitchell and I appointed a six-member
commission of outside experts to look at this issue and report back to
us, but the report was unfortunately ignored by Congress.
I suggested in 1994 and repeatedly since then that a similar
commission be constituted to report back to Congress, but with an
important difference. This time, the report should be in the form of
recommended legislative language which provides a solution and Congress
should have an opportunity for an up and down vote.
As my colleagues know, both President Clinton and Speaker Gingrich
endorsed a similar concept last year when they met in New Hampshire.
I therefore send to the desk a bill that establishes an eight-member
commission of outside experts. They would have the broadest possible
mandate to think through this problem, come up with solutions and
report back to Congress not more than 30 days after the convening of
the 105th Congress.
The commission will send Congress legislative language for those
recommendations on which seven members agree. Congress will consider
those recommendations under expedited procedures that mirror the fast-
track authorities in our trade laws.
I know my colleagues will be grappling with this issue soon. However,
I believe that it would be better to take this issue out of what is
already a super-heated partisan atmosphere, and allow a bipartisan
approach to be developed that Congress cannot ignore.
Mr. President, I ask unanimous consent that the text of the bill be
printed in the Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:
S. 1857
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 ``Bipartisan Campaign
Practices Commission Act of 1996''.
SEC. 2. ESTABLISHMENT.
There is established a commission to be known as the
``Bipartisan Commission on
[[Page S6085]]
Campaign Practices'' (referred to in this Act as the
``Commission'').
SEC. 3. DUTIES OF THE COMMISSION.
The Commission shall study the laws and regulations that
affect how campaigns for Federal office are conducted and may
make recommendations for change. In studying Federal campaign
practices, the Commission shall consider--
(1) whether too much or too little money is spent trying to
influence campaigns for Federal office and whether the funds
that are spent are sufficiently disclosed;
(2) whether the current laws (including regulations)
governing campaigns for Federal office encourage or
discourage those most qualified to hold office from seeking
it;
(3) whether the existing system of financing campaigns for
Federal office promotes trust and confidence in the political
process among the electorate;
(4) whether the rules governing access to media ensure that
the electorate has the greatest possible opportunity to be
informed of candidates' positions on the issues; and
(5) such other matters as the Commission considers
appropriate.
SEC. 4. MEMBERSHIP.
(a) Composition.--The Commission shall be composed of 9
members of the private sector, as follows:
(1) Two shall be appointed by the Majority Leader of the
Senate.
(2) Two shall be appointed by the Speaker of the House of
Representatives.
(3) Two shall be appointed by the President.
(4) One shall be appointed by the Minority Leader of the
Senate.
(5) One shall be appointed by the Minority Leader of the
House of Representatives.
(6) A chairperson shall be appointed in accordance with
subsection (b).
(b) Chairperson.--
(1) Selection.--Within 7 days after all the members
described in section 3(a) (1) through (5) are appointed,
those members shall meet and by majority vote select a
chairperson.
(2) Failure to make selection.--If, by the date that is 30
days after the date of the meeting described in subsection
(b), the office of chairperson is still vacant, all current
members of the Commission shall be discharged from further
service as members of the Commission.
(c) Vacancies.--A vacancy in the Commission shall be filled
in the manner in which the original appointment was made.
(d) Compensation.--Each member of the Commission shall each
be entitled to receive the daily equivalent of the annual
rate of basic pay in effect for level V of the Executive
Schedule under section 5316 of title 5, United States Code,
for each day during which the member is engaged in the actual
performance of the duties of the Commission.
(e) Quorum.--Six members of the Commission shall constitute
a quorum, and any decision of the Commission shall require
the affirmative vote of 6 members.
(f) Meetings.--The Commission shall meet at the call of the
chairperson or at the request of 6 members of the Commission.
SEC. 5. STAFF OF COMMISSION; SERVICES.
Subject to such rules as may be adopted by the Commission,
the chairperson, without regard to the provisions of title 5,
United States Code, governing appointments in the competitive
service and without regard to the provisions of chapter 51
and subchapter III of chapter 53 of that title relating to
classifications and General Schedule pay rates, may appoint
such staff personnel as the chairperson considers necessary
and procure temporary and intermittent services to the same
extent as is authorized by section 3109(b) of title 5, United
States Code.
SEC. 6. RECOMMENDATION; FAST TRACK PROCEDURES.
(a) Report.--Not later than 30 days after the convening of
the 105th Congress, the Commission shall submit to Congress a
report describing the study conducted under section 3.
(b) Recommendations.--The report under subsection (a) may
include any recommendations for changes in the laws
(including regulations) governing the conduct of Federal
campaigns, including any changes in the rules of the Senate
or the House of Representatives, to which 6 or more members
of the Commission may agree.
(c) Preparation of Bills.--If 7 or more members concur on 1
or more recommendations for changes in the way campaigns for
Federal office are conducted, the members agreeing on each
such recommendation shall prepare for each a bill that would
implement the recommendation, and the implementing bill shall
be submitted with the report under subsection (a).
(d) Consideration by Congress.--Each implementing bill
submitted with the report under subsection (a) shall be given
expedited consideration under the same provisions and in the
same way as an implementing bill for a trade agreement under
section 151 of the Trade Act of 1974 (19 U.S.C. 2191).
SEC. 7. TERMINATION.
The Commission shall cease to exist 30 days after
submission of the report under section 6.
SEC. 8. AUTHORIZATION OF APPROPRIATIONS.
There is authorized to be appropriated $750,000 to carry
out this Act.
______
By Mr. GRAHAM (for himself, Mr. Baucus and Mr. Pryor):
S. 1858. A bill to provide for improved coordination, communication,
and enforcement related to health care fraud, waste, and abuse; to the
Committee on Finance.
the medicare anti-fraud act of 1996
______
By Mr. GRAHAM (for himself, and Mr. Baucus):
S. 1859. A bill to create a point of order against legislation which
diverts savings achieved through medicare waste, fraud, and abuse
enforcement activities for purposes other than improving the solvency
of the Federal hospital insurance trust fund under title XVIII of the
Social Security Act, to ensure the integrity of such trust fund, and
for other purposes; to the Committee on Rules and Administration.
the medicare restore trust act of 1996
Mr. GRAHAM. Mr. President, I rise today to introduce timely
legislation with Senators Baucus and Pryor that addresses the problem
of Medicare fraud and abuse. The two bills, entitled the ``Medicare
Anti-Fraud Act of 1996'' and the ``Medicare Restore Trust Act of
1996,'' would undertake serious and strong anti-fraud efforts by the
Federal Government based in large part on the success of the
administration's recent Medicare and antifraud effort called Operation
Restore Trust and ensure that savings achieved from such efforts are
returned to the Medicare trust fund.
Mr. President, we have heard in the last few days some very troubling
reports about the impending insolvency of the Medicare trust fund. This
legislation would have two direct contributions to reversing that move
toward insolvency.
First, it would suture a hemorrhage of funds out of the Medicare
trust fund which today are going for fraudulent bills, and not for
service to American citizens; and, second, it would assure that any
funds that were recovered as a result of these more effective
investigations and prosecutions would go directly back into the
Medicare trust fund in order to restore its financial base.
Mr. President, unfortunately the phrase ``fraud, waste and abuse''
has become discredited. It has been used so often as an excuse for not
dealing with the more difficult and fundamental problems.
Unfortunately, the area of Medicare waste, fraud, and abuse is a part
of the fundamental problem. It has been estimated that of the $180
billion spent last year on Medicare and on approximately 36 million
Americans' health care--$180 billion--10 percent, or $18 billion, was
wasted in fraudulent activities.
You might ask why is there such a high level of fraud in this program
of Medicare? Some of the reasons include: The amount of money that is
being expended is huge--$180 billion and growing; that it is being
spent largely on populations which have groups within it that are
vulnerable to these fraudulent schemes; that those people who wish to
perpetrate those schemes are sophisticated shysters and there has been
lax enforcement.
First and foremost, the General Accounting Office estimates that the
Medicare waste, fraud and abuse rip-off rate is about 10 percent. With
fraud pilfering the health systems' resources, losses to Medicare and
the federal share of Medicaid could be $30 billion annually. Using the
most conservative of estimates, we could cover an additional 2 million
seniors a year with funds lost just to Medicare waste, fraud, and
abuse.
Two million additional Americans could be covered if those funds
could be properly directed.
Although it is increasingly unlikely that a Medicare reform package
will pass this year in Congress, it would be unconscionable to not pass
a Medicare waste, fraud and abuse this year. Rather than putting
Medicare beneficiaries at risk of losing coverage or access with the
cuts envisioned in some legislative proposals during this Congress, we
should act instead to combat Medicare fraud to protect the health care
of beneficiaries and the Medicare trust fund.
As the Citizens Against Government Waste wrote in their August 23,
1995, report entitled ``Medicare Fraud: Tales From the Gypped,''
``Preserving, protecting, and strengthening Medicare must be the number
one priority for Congress and the administration.'' The organization
details 89 examples in its report and advises that waste, fraud,
[[Page S6086]]
and abuse is the first area of needed attack.
How did this get to be such a problem? According to the General
Accounting Office in its February 1995 report entitled ``Medicare
Claims,'' ``Physicians, supply companies, or diagnostic laboratories
have about 3 chances out of 1,000 of having Medicare audit their
billing practices in any given year. Moreover, Medicare pays more
claims with less scrutiny today than at any other time over the past 5
years.'' The GAO continues, ``In fiscal year 1993, Medicare processed
almost 700 million claims, about 250 million more than it processed 5
years earlier. Despite the rising volume of claims, per-claim funding
for antifraud and antiabuse activities declined between 1989 and 1993
by over 20 percent.''
As a result, FBI Director Louis Freeh says cocaine distributors in
south Florida and southern California are switching from drug dealing
to health care fraud. The reason: more money with less risk. Drug
dealers committing health care fraud know that law enforcement is not
yet equipped with the laws needed to effectively attack the problem.
With a program estimated by the Congressional Budget Office to be
spending over $1.6 billion during the next 6 years and with lax laws to
combat abuse, con artists, thieves, and opportunists know Medicare is
where the easy money is.
As Republican Congressmen Steven Schiff and Chris Shays write,
``currently there is no Federal crime of health care fraud. It is
difficult to prosecute health care-related offenses because law
enforcement must rely on wire and mail fraud statutes for their
investigations and prosecutions.''
Attacking fraud is crucial to the overall Medicare debate for the
following reasons:
Fraud ought to be the first place we look when considering reductions
in Medicare expenditures.
Fraud undermines public confidence in Medicare. We cannot ``fix''
Medicare while letting fraud erode the system.
One dollar spent against fraud and abuse can reduce Medicare Program
costs by as much as 11 dollars, according to the Health Care Financing
Administration [HCFA] and demonstrated by the administration's effort
in Operation Restore Trust.
Solutions are available.
What can be done to solve this problem? To engage in a comprehensive
assault on fraud, particularly within the Medicare Program, multiple
agencies within the Federal Government will need additional resources.
The Inspector General testified at a hearing before the Senate Finance
Committee that ``now is the time to implement new legal remedies and
reverse the downward trend of funding for efforts to combat health care
fraud and abuse.'' The legislation that I am introducing today will
achieve both of these goals.
Operation Restore Trust is an effort currently underway in five
States which brings together the HHS Office of Inspector General,
Health Care Financing Administration, the Department of Justice, State
Medicaid agencies, and State Medicaid fraud control units to combat
fraud and abuse. This legislation would institutionalize these efforts
in all 50 States.
The Department of Health and Human Services recently released results
from the first year of Operation Restore Trust. The program had $4.09
million to work with and has added $43.2 million to the Medicare trust
fund and U.S. Treasury: an 11-to-1 return. This program has been a
great success, but I agree with June Gibbs Brown that this is the ``tip
of the iceberg.''
To provide adequate resources to go after the fraud and abuse, we
establish a Medicare anti-fraud account for the Inspector General (IG)
and an anti-fraud control account for other government agency's use.
Funds for the Medicare account would be provided by and returned to the
Medicare trust fund. For every $1 spent on prevention, the IG uncovers
at least $7 in fraud. By using trust fund dollars to augment IG
operations, the legislation assures that the IG will continue to have
the resources necessary to combat fraud and abuse without worrying
about discretionary spending cuts.
This legislation enacts a broad-based Federal statute aimed at
suppressing Medicare fraud. This enhances the protection of fraud
victims and prescribe stiff penalties against those convicted of fraud.
It institutes a policy, ``one strike and you are out,'' one instance of
Medicare fraud and you are out of the program for at least 5 years.
The second bill would establish a point of order against any piece of
legislation that would divert savings from anti-fraud, waste and abuse
enforcement activities for any other purpose--such as new Federal
spending or tax breaks--other than saving the Medicare trust fund. This
legislation would also ensure that any savings from anti-fraud, waste
and abuse activities reimburse the up-front investment on enforcement
and further strengthen the Medicare trust fund.
We have all promised to protect Medicare. We can do so by passing
comprehensive Medicare waste, fraud, and abuse legislation and do it in
1996, thus ensuring savings achieved are used to protect Medicare and
improve its solvency. The two bills we are introducing today--the
Medicare Anti-Fraud Act of 1996 and the Medicare Restore Trust Act--
would accomplish these goals.
Mr. President, I suggest these two pieces of legislation should get
the immediate attention of this Senate. I am pleased to see that we
have with us today the chairman of the Senate Finance Committee, which
I assume will be the primary committee of reference for consideration
of this legislation.
Every day that passes allows for further waste of Federal taxpayers
money and further eroding of the solvency of the Medicare trust fund,
further erosion of the confidence of the American people. We must take
action now.
At the signing of the Medicare bill in Missouri 30 years ago,
President Johnson said Medicare had been planted with ``the seed of
compassion and duty which have today flowered into care for the sick
and serenity for the fearful.'' Medicare has lived up to the promise of
President Johnson and President Truman. But fraud is rotting away at
the Medicare system. We have the prescriptions to combat fraud. Now is
the time to employ them if we want to save the integrity of Medicare
for future generations.
Mr. President, I ask unanimous consent that the text of the bills be
printed in the Record.
There being no objection, the bills were ordered to be printed in the
Record, as follows:
S. 1858
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; REFERENCES IN ACT; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Medicare
Antifraud Act of 1996''.
(b) Amendments to Social Security Act.--Except as otherwise
specifically provided, whenever in this Act an amendment is
expressed in terms of an amendment to, or repeal of, a
section or other provision, the reference shall be considered
to be made to that section or other provision of the Social
Security Act.
(c) Table of Contents.--The table of contents of this Act
is as follows:
Sec. 1. Short title; references in act; table of contents.
TITLE I--FRAUD AND ABUSE CONTROL PROGRAM
Sec. 101. Fraud and abuse control program.
Sec. 102. Medicare benefit integrity system.
Sec. 103. Application of certain health antifraud and abuse sanctions
to fraud and abuse against Federal health programs.
Sec. 104. Health care fraud and abuse provider guidance.
Sec. 105. Medicare/medicaid beneficiary protection program.
Sec. 106. Ensuring the integrity of the Federal Hospital Insurance
Trust Fund.
TITLE II--REVISIONS TO CURRENT SANCTIONS FOR FRAUD AND ABUSE
Sec. 201. Mandatory exclusion from participation in medicare and State
health care programs.
Sec. 202. Establishment of minimum period of exclusion for certain
individuals and entities subject to permissive exclusion
from medicare and State health care programs.
Sec. 203. Permissive exclusion of individuals with ownership or control
interest in sanctioned entities.
Sec. 204. Sanctions against practitioners and persons for failure to
comply with statutory obligations.
Sec. 205. Sanctions against providers for excessive fees or prices.
Sec. 206. Applicability of the Bankruptcy Code to program sanctions.
Sec. 207. Intermediate sanctions for medicare health maintenance
organizations.
Sec. 208. Liability of medicare carriers and fiscal intermediaries and
States for claims submitted by excluded providers.
Sec. 209. Effective date.
[[Page S6087]]
TITLE III--ADMINISTRATIVE AND MISCELLANEOUS PROVISIONS
Sec. 301. Establishment of the health care fraud and abuse data
collection program.
Sec. 302. Inspector General access to additional practitioner data
bank.
Sec. 303. Corporate whistleblower program.
Sec. 304. Home health billing, payment, and cost limit calculation to
be based on site where service is furnished.
Sec. 305. Application of inherent reasonableness.
Sec. 306. Clarification of time and filing limitations.
Sec. 307. Clarification of liability of third party administrators.
Sec. 308. Clarification of payment amounts to medicare.
Sec. 309. Increased flexibility in contracting for medicare claims
processing.
TITLE IV--CIVIL MONETARY PENALTIES
Sec. 401. Social Security Act civil monetary penalties.
TITLE V--AMENDMENTS TO CRIMINAL LAW
Sec. 501. Health care fraud.
Sec. 502. Forfeitures for Federal health care offenses.
Sec. 503. Injunctive relief relating to Federal health care offenses.
Sec. 504. Grand jury disclosure.
Sec. 505. False statements.
Sec. 506. Obstruction of criminal investigations, audits, or
inspections of Federal health care offenses.
Sec. 507. Theft or embezzlement.
Sec. 508. Laundering of monetary instruments.
Sec. 509. Authorized investigative demand procedures.
TITLE VI--STATE HEALTH CARE FRAUD CONTROL UNITS
Sec. 601. State health care fraud control units.
TITLE VII--MEDICARE/MEDICAID BILLING ABUSE PREVENTION
Sec. 701. Uniform medicare/medicaid application process.
Sec. 702. Standards for uniform claims.
Sec. 703. Unique provider identification code.
Sec. 704. Use of new procedures.
Sec. 705. Nondischargeability of certain medicare debts.
TITLE I--FRAUD AND ABUSE CONTROL PROGRAM
SEC. 101. FRAUD AND ABUSE CONTROL PROGRAM.
(a) Establishment of Program.--Title XI (42 U.S.C. 1301 et
seq.) is amended by inserting after section 1128B the
following new section:
``fraud and abuse control program
``Sec. 1128C. (a) Establishment of Program.--
``(1) In general.--Not later than January 1, 1997, the
Secretary, acting through the Office of the Inspector General
of the Department of Health and Human Services, and the
Attorney General shall establish a program--
``(A) to coordinate Federal, State, and local law
enforcement programs to control fraud and abuse with respect
to health plans,
``(B) to conduct investigations, audits, evaluations, and
inspections relating to the delivery of and payment for
health care in the United States,
``(C) to facilitate the enforcement of the provisions of
sections 1128, 1128A, and 1128B and other statutes applicable
to health care fraud and abuse,
``(D) to provide for the modification and establishment of
safe harbors and to issue advisory opinions and special fraud
alerts pursuant to section 104 of the Medicare Antifraud Act
of 1996, and
``(E) to provide for the reporting and disclosure of
certain final adverse actions against health care providers,
suppliers, or practitioners pursuant to the data collection
system established under section 301 of such Act.
``(2) Coordination with health plans.--In carrying out the
program established under paragraph (1), the Secretary and
the Attorney General shall consult with, and arrange for the
sharing of data with representatives of health plans.
``(3) Guidelines.--
``(A) In general.--The Secretary and the Attorney General
shall issue guidelines to carry out the program under
paragraph (1). The provisions of sections 553, 556, and 557
of title 5, United States Code, shall not apply in the
issuance of such guidelines.
``(B) Information guidelines.--
``(i) In general.--Guidelines issued under subparagraph (A)
shall include guidelines relating to the furnishing of
information by health plans, providers, and others to enable
the Secretary and the Attorney General to carry out the
program (including coordination with health plans under
paragraph (2)).
``(ii) Confidentiality.--Guidelines issued under
subparagraph (A) shall include procedures to assure that such
information is provided and utilized in a manner that
appropriately protects the confidentiality of the information
and the privacy of individuals receiving health care services
and items.
``(iii) Qualified immunity for providing information.--The
provisions of section 1157(a) (relating to limitation on
liability) shall apply to a person providing information to
the Secretary or the Attorney General in conjunction with
their performance of duties under this section.
``(4) Ensuring access to documentation.--The Inspector
General of the Department of Health and Human Services is
authorized to exercise such authority described in paragraphs
(3) through (9) of section 6 of the Inspector General Act of
1978 (5 U.S.C. App.) as necessary with respect to the
activities under the fraud and abuse control program
established under this subsection.
``(5) Authority of inspector general.--Nothing in this Act
shall be construed to diminish the authority of any Inspector
General, including such authority as is provided in the
Inspector General Act of 1978 (5 U.S.C. App.).
``(b) Additional Use of Funds by Inspector General.--
``(1) Reimbursements for investigations.--The Inspector
General of the Department of Health and Human Services is
authorized to receive and retain for current use
reimbursement for the costs of conducting investigations and
audits and for monitoring compliance plans when such costs
are ordered by a court, voluntarily agreed to by the payor,
or otherwise.
``(2) Crediting.--Funds received by the Inspector General
under paragraph (1) as reimbursement for costs of conducting
investigations shall be deposited to the credit of the
appropriation from which initially paid, or to appropriations
for similar purposes currently available at the time of
deposit, and shall remain available for obligation for 1 year
from the date of the deposit of such funds.
``(c) Health Plan Defined.--For purposes of this section,
the term `health plan' means a plan or program that provides
health benefits, whether directly, through insurance, or
otherwise, and includes--
``(1) a policy of health insurance;
``(2) a contract of a service benefit organization; and
``(3) a membership agreement with a health maintenance
organization or other prepaid health plan.''.
(b) Establishment of Health Care Fraud and Abuse Control
Account in Federal Hospital Insurance Trust Fund.--Section
1817 (42 U.S.C. 1395i) is amended by adding at the end the
following new subsection:
``(k) Health Care Fraud and Abuse Control Account.--
``(1) Establishment.--There is hereby established in the
Trust Fund an expenditure account to be known as the `Health
Care Fraud and Abuse Control Account' (in this subsection
referred to as the `Account').
``(2) Appropriated amounts to trust fund.--
``(A) In general.--There are hereby appropriated to the
Trust Fund--
``(i) such gifts and bequests as may be made as provided in
subparagraph (B);
``(ii) such amounts as may be deposited in the Trust Fund
as provided in title XI; and
``(iii) such amounts as are transferred to the Trust Fund
under subparagraph (C).
``(B) Authorization to accept gifts.--The Trust Fund is
authorized to accept, on behalf of the United States, money
gifts and bequests made unconditionally to the Trust Fund,
for the benefit of the Account or any activity financed
through the Account.
``(C) Transfer of amounts.--The Managing Trustee shall
transfer to the Trust Fund, under rules similar to the rules
in section 9601 of the Internal Revenue Code of 1986, an
amount equal to the sum of the following:
``(i) Criminal fines recovered in cases involving a Federal
health care offense (as defined in section 982(a)(6)(B) of
title 18, United States Code).
``(ii) Civil monetary penalties and assessments imposed in
health care cases, including amounts recovered under titles
XI, XVIII, and XIX, and chapter 38 of title 31, United States
Code (except as otherwise provided by law).
``(iii) Amounts resulting from the forfeiture of property
by reason of a Federal health care offense.
``(iv) Penalties and damages obtained and otherwise
creditable to miscellaneous receipts of the general fund of
the Treasury obtained under sections 3729 through 3733 of
title 31, United States Code (known as the False Claims Act),
in cases involving claims related to the provision of health
care items and services (other than funds awarded to a
relator, for restitution or otherwise authorized by law).
``(3) Appropriated amounts to account for fraud and abuse
control program, etc.--
``(A) Departments of health and human services and
justice.--
``(i) In general.--There are hereby appropriated to the
Account from the Trust Fund such sums as the Secretary and
the Attorney General certify are necessary to carry out the
purposes described in subparagraph (C), to be available
without further appropriation, in an amount not to exceed--
``(I) for fiscal year 1997, $104,000,000;
``(II) for each of the fiscal years 1998 through 2003, the
limit for the preceding fiscal year, increased by 15 percent;
and
``(III) for each fiscal year after fiscal year 2003, the
limit for fiscal year 2003.
``(ii) Medicare and medicaid activities.--For each fiscal
year, of the amount appropriated in clause (i), the following
amounts shall be available only for the purposes of the
activities of the Office of the Inspector General of the
Department of Health and Human Services with respect to the
medicare and medicaid programs--
[[Page S6088]]
``(I) for fiscal year 1997, not less than $60,000,000 and
not more than $70,000,000;
``(II) for fiscal year 1998, not less than $80,000,000 and
not more than $90,000,000;
``(III) for fiscal year 1999, not less than $90,000,000 and
not more than $100,000,000;
``(IV) for fiscal year 2000, not less than $110,000,000 and
not more than $120,000,000;
``(V) for fiscal year 2001, not less than $120,000,000 and
not more than $130,000,000;
``(VI) for fiscal year 2002, not less than $140,000,000 and
not more than $150,000,000; and
``(VII) for each fiscal year after fiscal year 2002, not
less than $150,000,000 and not more than $160,000,000.
``(B) Federal bureau of investigation.--There are hereby
appropriated from the general fund of the United States
Treasury and hereby appropriated to the Account for transfer
to the Federal Bureau of Investigation to carry out the
purposes described in subparagraph (C), to be available
without further appropriation--
``(i) for fiscal year 1997, $47,000,000;
``(ii) for fiscal year 1998, $56,000,000;
``(iii) for fiscal year 1999, $66,000,000;
``(iv) for fiscal year 2000, $76,000,000;
``(v) for fiscal year 2001, $88,000,000;
``(vi) for fiscal year 2002, $101,000,000; and
``(vii) for each fiscal year after fiscal year 2002,
$114,000,000.
``(C) Use of funds.--The purposes described in this
subparagraph are to cover the costs (including equipment,
salaries, benefits, travel, and training) of the
administration and operation of the health care fraud and
abuse control program established under section 1128C(a),
including the costs of--
``(i) prosecuting health care matters (through criminal,
civil, and administrative proceedings);
``(ii) investigations;
``(iii) financial and performance audits of health care
programs and operations;
``(iv) inspections and other evaluations; and
``(v) provider and consumer education regarding compliance
with the provisions of title XI.
``(4) Appropriated amounts to account for medicare benefit
integrity system.--
``(A) In general.--There are hereby appropriated to the
Account from the Trust Fund for each fiscal year such amounts
as are necessary to carry out the Medicare Benefit Integrity
System under section 1889, subject to subparagraph (B), to be
available without further appropriation.
``(B) Amounts specified.--The amount appropriated under
subparagraph (A) for a fiscal year is as follows:
``(i) For fiscal year 1997, such amount shall be not less
than $430,000,000 and not more than $440,000,000.
``(ii) For fiscal year 1998, such amount shall be not less
than $490,000,000 and not more than $500,000,000.
``(iii) For fiscal year 1999, such amount shall be not less
than $550,000,000 and not more than $560,000,000.
``(iv) For fiscal year 2000, such amount shall be not less
than $620,000,000 and not more than $630,000,000.
``(v) For fiscal year 2001, such amount shall be not less
than $670,000,000 and not more than $680,000,000.
``(vi) For fiscal year 2002, such amount shall be not less
than $690,000,000 and not more than $700,000,000.
``(vii) For each fiscal year after fiscal year 2002, such
amount shall be not less than $710,000,000 and not more than
$720,000,000.
``(5) Annual report.--The Secretary and the Attorney
General shall submit jointly an annual report to Congress on
the amount of revenue which is generated and disbursed, and
the justification for such disbursements, by the Account in
each fiscal year.''.
SEC. 102. MEDICARE BENEFIT INTEGRITY SYSTEM.
Part C of title XVIII (42 U.S.C. 1395 et seq.) is amended
by inserting after section 1888 the following new section:
``medicare benefit integrity contracts
``Sec. 1889. (a) Authority To Contract.--
``(1) In general.--In order to improve the effectiveness of
benefit quality assurance activities relating to programs
under this title, and to enhance the Secretary's capability
of carrying out program safeguard functions and related
education activities to avoid the improper expenditure of
assets of the Federal Hospital Insurance Trust Fund and the
Federal Supplementary Medical Insurance Trust Fund, the
Secretary shall enter into contracts with organizations or
other entities having demonstrated the capability to carry
out one or more benefit quality assurance activities. The
provisions of sections 1816 and 1842 shall be inapplicable to
contracts under this section.
``(2) Number of contracts.--The Secretary shall determine
the number of separate contracts which are necessary to
achieve, with the maximum degree of efficiency and cost-
effectiveness, the objectives of this section. The Secretary
may enter into contracts under this section at such time or
times as are appropriate so long as not later than the fiscal
year beginning October 1, 1998, and for each fiscal year
thereafter, there are in effect contracts that, considered
collectively, provide for benefit quality assurance
activities with respect to all payments under this title.
``(b) Contract Requirements.--A benefit quality assurance
contract entered into under subsection (a) must provide for
one or more benefit quality assurance program activities.
Each such contract shall include an agreement by the
contractor to cooperate with the Inspector General of the
Department of Health and Human Services, and the Attorney
General, and other law enforcement agencies, as appropriate,
in the investigation and deterrence of fraud and abuse in
relation to this title and in other cases arising out of the
activities described in such section, and shall contain such
other provisions as the Secretary finds necessary or
appropriate to achieve the purposes of this part. The
provisions of section 1153(e)(1) shall apply to contracts and
contracting authority under this section, except that
competitive procedures must be used when entering into new
contracts under this section, or at any other time when it is
in the best interests of the United States. A contract under
this section may be renewed from term to term without regard
to any provision of law requiring competition if the
contractor has met or exceeded the performance requirements
established in the current contract.
``(c) Limitations.--
``(1) In general.--In carrying out this section, the
Secretary may not enter into a contract with an organization
or other entity if the Secretary determines that such
organization's or entity's financial holdings, interests, or
relationships would interfere with its ability to perform the
functions to be required by the contract in an effective and
impartial manner.
``(2) Limitation of liability.--The Secretary shall by
regulation provide for the limitation of a contractor's
liability for actions taken to carry out a contract under
this section, and such regulations shall, to the extent the
Secretary finds appropriate, employ the same or comparable
standards and other substantive and procedural provisions as
are contained in section 1157.''.
SEC. 103. APPLICATION OF CERTAIN HEALTH ANTIFRAUD AND ABUSE
SANCTIONS TO FRAUD AND ABUSE AGAINST FEDERAL
HEALTH PROGRAMS.
(a) Crimes.--
(1) Social security act.--Section 1128B (42 U.S.C. 1320a-
7b) is amended as follows:
(A) In the heading, by striking ``medicare or state health
care programs'' and inserting ``federal health care
programs''.
(B) In subsection (a)(1), by striking ``a program under
title XVIII or a State health care program (as defined in
section 1128(h))'' and inserting ``a Federal health care
program (as defined in subsection (f))''.
(C) In subsection (a)(5), by striking ``a program under
title XVIII or a State health care program'' and inserting
``a Federal health care program (as defined in subsection
(f))''.
(D) In the second sentence of subsection (a)--
(i) by striking ``a State plan approved under title XIX''
and inserting ``a Federal health care program (as defined in
subsection (f))''; and
(ii) by striking ``the State may at its option
(notwithstanding any other provision of that title or of such
plan)'' and inserting ``the administrator of such program may
at its option (notwithstanding any other provision of such
program)''.
(E) In subsection (b)--
(i) by striking ``and willfully'' each place it appears;
(ii) by striking ``$25,000'' each place it appears and
inserting ``$50,000'';
(iii) by striking ``title XVIII or a State health care
program'' each place it appears and inserting ``Federal
health care program (as defined in subsection (f))'';
(iv) in paragraph (1) in the matter preceding subparagraph
(A), by striking ``kind--'' and inserting ``kind with intent
to be influenced--'';
(v) in paragraph (1)(A), by striking ``in return for
referring'' and inserting ``to refer'';
(vi) in paragraph (1)(B), by striking ``in return for
purchasing, leasing, ordering, or arranging for or
recommending'' and inserting ``to purchase, lease, order, or
arrange for or recommend'';
(vii) in paragraph (2) in the matter preceding subparagraph
(A), by striking ``to induce such person'' and inserting
``with intent to influence such person'';
(viii) by adding at the end of paragraphs (1) and (2) the
following sentence: ``A violation exists under this paragraph
if one or more purposes of the remuneration is unlawful under
this paragraph.'';
(ix) by redesignating paragraph (3) as paragraph (4);
(x) in paragraph (4) (as redesignated) in the matter
preceding subparagraph (A), by striking ``Paragraphs (1) and
(2)'' and inserting ``Paragraphs (1), (2), and (3)''; and
(xi) by inserting after paragraph (2) the following new
paragraph:
``(3)(A) The Attorney General may bring an action in the
district courts to impose upon any person who carries out any
activity in violation of this subsection a civil penalty of
not less than $25,000 and not more than $50,000 for each such
violation, plus three times the total remuneration offered,
paid, solicited, or received.
``(B) A violation exists under this paragraph if one or
more purposes of the remuneration is unlawful, and the
damages shall be the full amount of such remuneration.
``(C) Section 3731 of title 31, United States Code, and the
Federal Rules of Civil Procedure shall apply to actions
brought under this paragraph.
``(D) The provisions of this paragraph do not affect the
availability of other criminal and civil remedies for such
violations.''.
[[Page S6089]]
(F) In subsection (c), by inserting ``(as defined in
section 1128(h))'' after ``a State health care program''.
(G) By adding at the end the following new subsections:
``(f) For purposes of this section, the term `Federal
health care program' means--
``(1) any plan or program that provides health benefits,
whether directly, through insurance, or otherwise, which is
funded, in whole or in part, by the United States Government;
or
``(2) any State health care program, as defined in section
1128(h).
``(g)(1) The Inspector General of the departments and
agencies with a Federal health care program may conduct an
investigation or audit relating to violations of this section
and claims within the jurisdiction of other Federal
departments or agencies if the following conditions are
satisfied:
``(A) The investigation or audit involves primarily claims
submitted to the Federal health care programs of the
department or agency conducting the investigation or audit.
``(B) The Inspector General of the department or agency
conducting the investigation or audit gives notice and an
opportunity to participate in the investigation or audit to
the Inspector General of the department or agency with
primary jurisdiction over the Federal health care programs to
which the claims were submitted.
``(2) If the conditions specified in paragraph (1) are
fulfilled, the Inspector General of the department or agency
conducting the investigation or audit may exercise all powers
granted under the Inspector General Act of 1978 (5 U.S.C.
App.) with respect to the claims submitted to the other
departments or agencies to the same manner and extent as
provided in that Act with respect to claims submitted to such
departments or agencies.''.
(2) Identification of community service opportunities.--
Section 1128B (42 U.S.C. 1320a-7b), as amended by paragraph
(1), is amended by adding at the end the following new
subsection:
``(h) The Secretary may--
``(1) in consultation with State and local health care
officials, identify opportunities for the satisfaction of
community service obligations that a court may impose upon
the conviction of an offense under this section; and
``(2) make information concerning such opportunities
available to Federal and State law enforcement officers and
State and local health care officials.''.
(b) Effective Date.--The amendments made by this section
shall take effect on January 1, 1997.
SEC. 104. HEALTH CARE FRAUD AND ABUSE PROVIDER GUIDANCE.
(a) Solicitation and Publication of Modifications to
Existing Safe Harbors and New Safe Harbors.--
(1) In general.--
(A) Solicitation of proposals for safe harbors.--Not later
than January 1, 1997, and not less than annually thereafter,
the Secretary shall publish a notice in the Federal Register
soliciting proposals, which will be accepted during a 60-day
period, for--
(i) modifications to existing safe harbors issued pursuant
to section 14(a) of the Medicare Patient and Program
Protection Act of 1987 (42 U.S.C. 1320a-7b note);
(ii) additional safe harbors specifying payment practices
that shall not be treated as a criminal offense under section
1128B(b) of the Social Security Act (42 U.S.C. 1320a-7b(b))
and shall not serve as the basis for an exclusion under
section 1128(b)(7) of such Act (42 U.S.C. 1320a-7(b)(7));
(iii) interpretive rulings to be issued pursuant to
subsection (b); and
(iv) special fraud alerts to be issued pursuant to
subsection (c).
(B) Publication of proposed modifications and proposed
additional safe harbors.--After considering the proposals
described in clauses (i) and (ii) of subparagraph (A), the
Secretary, in consultation with the Attorney General, shall
publish in the Federal Register proposed modifications to
existing safe harbors and proposed additional safe harbors,
if appropriate, with a 60-day comment period. After
considering any public comments received during this period,
the Secretary shall issue final rules modifying the existing
safe harbors and establishing new safe harbors, as
appropriate.
(C) Report.--The Inspector General of the Department of
Health and Human Services (in this section referred to as the
``Inspector General'') shall, in an annual report to Congress
or as part of the year-end semiannual report required by
section 5 of the Inspector General Act of 1978 (5 U.S.C.
App.), describe the proposals received under clauses (i) and
(ii) of subparagraph (A) and explain which proposals were
included in the publication described in subparagraph (B),
which proposals were not included in that publication, and
the reasons for the rejection of the proposals that were not
included.
(2) Criteria for modifying and establishing safe harbors.--
In modifying and establishing safe harbors under paragraph
(1)(B), the Secretary may consider the extent to which
providing a safe harbor for the specified payment practice
may result in any of the following:
(A) An increase or decrease in access to health care
services.
(B) An increase or decrease in the quality of health care
services.
(C) An increase or decrease in patient freedom of choice
among health care providers.
(D) An increase or decrease in competition among health
care providers.
(E) An increase or decrease in the ability of health care
facilities to provide services in medically underserved areas
or to medically underserved populations.
(F) An increase or decrease in the cost to Federal health
care programs (as defined in section 1128B(f) of the Social
Security Act (42 U.S.C. 1320a-7b(f)).
(G) An increase or decrease in the potential
overutilization of health care services.
(H) The existence or nonexistence of any potential
financial benefit to a health care professional or provider
which may vary based on their decisions of--
(i) whether to order a health care item or service; or
(ii) whether to arrange for a referral of health care items
or services to a particular practitioner or provider.
(I) Any other factors the Secretary deems appropriate in
the interest of preventing fraud and abuse in Federal health
care programs (as so defined).
(b) Interpretive Rulings.--
(1) In general.--
(A) Request for interpretive ruling.--Any person may
present, at any time, a request to the Inspector General for
a statement of the Inspector General's current interpretation
of the meaning of a specific aspect of the application of
sections 1128A and 1128B of the Social Security Act (42
U.S.C. 1320a-7a and 1320a-7b) (in this section referred to as
an ``interpretive ruling'').
(B) Issuance and effect of interpretive ruling.--
(i) In general.--If appropriate, the Inspector General
shall in consultation with the Attorney General, issue an
interpretive ruling not later than 120 days after receiving a
request described in subparagraph (A). Interpretive rulings
shall not have the force of law and shall be treated as an
interpretive rule within the meaning of section 553(b) of
title 5, United States Code. All interpretive rulings issued
pursuant to this clause shall be published in the Federal
Register or otherwise made available for public inspection.
(ii) Reasons for denial.--If the Inspector General does not
issue an interpretive ruling in response to a request
described in subparagraph (A), the Inspector General shall
notify the requesting party of such decision not later than
120 days after receiving such a request and shall identify
the reasons for such decision.
(2) Criteria for interpretive rulings.--
(A) In general.--In determining whether to issue an
interpretive ruling under paragraph (1)(B), the Inspector
General may consider--
(i) whether and to what extent the request identifies an
ambiguity within the language of the statute, the existing
safe harbors, or previous interpretive rulings; and
(ii) whether the subject of the requested interpretive
ruling can be adequately addressed by interpretation of the
language of the statute, the existing safe harbor rules, or
previous interpretive rulings, or whether the request would
require a substantive ruling (as defined in section 552 of
title 5, United States Code) not authorized under this
subsection.
(B) No rulings on factual issues.--The Inspector General
shall not give an interpretive ruling on any factual issue,
including the intent of the parties or the fair market value
of particular leased space or equipment.
(c) Special Fraud Alerts.--
(1) In general.--
(A) Request for special fraud alerts.--Any person may
present, at any time, a request to the Inspector General for
a notice which informs the public of practices which the
Inspector General considers to be suspect or of particular
concern under section 1128B(b) of the Social Security Act (42
U.S.C. 1320a-7b(b)) (in this subsection referred to as a
``special fraud alert'').
(B) Issuance and publication of special fraud alerts.--Upon
receipt of a request described in subparagraph (A), the
Inspector General shall investigate the subject matter of the
request to determine whether a special fraud alert should be
issued. If appropriate, the Inspector General shall issue a
special fraud alert in response to the request. All special
fraud alerts issued pursuant to this subparagraph shall be
published in the Federal Register.
(2) Criteria for special fraud alerts.--In determining
whether to issue a special fraud alert upon a request
described in paragraph (1), the Inspector General may
consider--
(A) whether and to what extent the practices that would be
identified in the special fraud alert may result in any of
the consequences described in subsection (a)(2); and
(B) the volume and frequency of the conduct that would be
identified in the special fraud alert.
SEC. 105. MEDICARE/MEDICAID BENEFICIARY PROTECTION PROGRAM.
(a) Establishment of Program.--Not later than January 1,
1997, the Secretary (through the Administrator of the Health
Care Financing Administration and the Inspector General of
the Department of Health and Human Services) shall establish
the Medicare/Medicaid Beneficiary Protection Program. Under
such program the Secretary shall--
(1) educate medicare and medicaid beneficiaries regarding--
(A) medicare and medicaid program coverage;
(B) fraudulent and abusive practices;
[[Page S6090]]
(C) medically unnecessary health care items and services;
and
(D) substandard health care items and services;
(2) identify and publicize fraudulent and abusive practices
with respect to the delivery of health care items and
services; and
(3) establish a procedure for the reporting of fraudulent
and abusive health care providers, practitioners, claims,
items, and services to appropriate law enforcement and payer
agencies.
(b) Recognition and Publication of Contributions.--The
program established by the Secretary under this section shall
recognize and publicize significant contributions made by
individual health care patients toward the combating of
health care fraud and abuse.
(c) Dissemination of Information.--The Secretary shall
provide for the broad dissemination of information regarding
the Medicare/Medicaid Beneficiary Protection Program.
SEC. 106. ENSURING THE INTEGRITY OF THE FEDERAL HOSPITAL
INSURANCE TRUST FUND.
(a) Determination.--Prior to the end of each fiscal year,
the Secretary of Health and Human Services (in this section
referred to as the ``Secretary'') and the Attorney General
shall jointly determine--
(1) the portion of the costs charged during such fiscal
year to any account established within the Federal Hospital
Insurance Trust Fund under title XVIII of the Social Security
Act (42 U.S.C. 1395 et seq.) to combat health care waste,
fraud, and abuse, which do not relate to the administration
of the medicare program; and
(2) the amount of funds deposited into such account of such
trust fund during such fiscal year that were attributable to
enforcement activities that were intended to combat health
care waste, fraud, and abuse, which do not relate to the
administration of the medicare program.
(b) Certification.--If the portion determined under
paragraph (1) of subsection (a) exceeds the amount determined
under paragraph (2) of such subsection, the Secretary and the
Attorney General shall certify to the Secretary of the
Treasury the amount, which shall be equal to the amount of
such excess, which should be transferred from the General
Fund of the Treasury to such trust fund, in order to ensure
that such trust fund is fully reimbursed for any expenditures
made from the account described in subsection (a) that are
not related to the administration of the medicare program
under title XVIII of the Social Security Act.
(c) Transfer of Funds.--The Secretary of the Treasury shall
transfer to such trust fund from the General Fund of the
Treasury, out of any funds in the General Fund that are not
otherwise appropriated, an amount equal to the amount
certified under subsection (b).
TITLE II--REVISIONS TO CURRENT SANCTIONS FOR FRAUD AND ABUSE
SEC. 201. MANDATORY EXCLUSION FROM PARTICIPATION IN MEDICARE
AND STATE HEALTH CARE PROGRAMS.
(a) Individual Convicted of Felony Relating to Health Care
Fraud.--
(1) In general.--Section 1128(a) (42 U.S.C. 1320a-7(a)) is
amended by adding at the end the following new paragraph:
``(3) Felony conviction relating to health care fraud.--Any
individual or entity that has been convicted after the date
of the enactment of the Medicare Antifraud Act of 1996, under
Federal or State law, in connection with the delivery of a
health care item or service or with respect to any act or
omission in a health care program (other than those
specifically described in paragraph (1)) operated by or
financed in whole or in part by any Federal, State, or local
government agency, of a criminal offense consisting of a
felony relating to fraud, theft, embezzlement, breach of
fiduciary responsibility, or other financial misconduct.''.
(2) Conforming amendment.--Paragraph (1) of section 1128(b)
(42 U.S.C. 1320a-7(b)) is amended to read as follows:
``(1) Conviction relating to fraud.--Any individual or
entity that has been convicted after the date of the
enactment of the Medicare Antifraud Act of 1996, under
Federal or State law--
``(A) of a criminal offense consisting of a misdemeanor
relating to fraud, theft, embezzlement, breach of fiduciary
responsibility, or other financial misconduct--
``(i) in connection with the delivery of a health care item
or service, or
``(ii) with respect to any act or omission in a health care
program (other than those specifically described in
subsection (a)(1)) operated by or financed in whole or in
part by any Federal, State, or local government agency; or
``(B) of a criminal offense relating to fraud, theft,
embezzlement, breach of fiduciary responsibility, or other
financial misconduct with respect to any act or omission in a
program (other than a health care program) operated by or
financed in whole or in part by any Federal, State, or local
government agency.''.
(b) Individual Convicted of Felony Relating to Controlled
Substance.--
(1) In general.--Section 1128(a) (42 U.S.C. 1320a-7(a)), as
amended by subsection (a), is amended by adding at the end
the following new paragraph:
``(4) Felony conviction relating to controlled substance.--
Any individual or entity that has been convicted after the
date of the enactment of the Medicare Antifraud Act of 1996,
under Federal or State law, of a criminal offense consisting
of a felony relating to the unlawful manufacture,
distribution, prescription, or dispensing of a controlled
substance.''.
(2) Conforming amendment.--Section 1128(b)(3) (42 U.S.C.
1320a-7(b)(3)) is amended--
(A) in the heading, by striking ``Conviction'' and
inserting ``Misdemeanor conviction''; and
(B) by striking ``criminal offense'' and inserting
``criminal offense consisting of a misdemeanor''.
SEC. 202. ESTABLISHMENT OF MINIMUM PERIOD OF EXCLUSION FOR
CERTAIN INDIVIDUALS AND ENTITIES SUBJECT TO
PERMISSIVE EXCLUSION FROM MEDICARE AND STATE
HEALTH CARE PROGRAMS.
Section 1128(c)(3) (42 U.S.C. 1320a-7(c)(3)) is amended by
adding at the end the following new subparagraphs:
``(D) In the case of an exclusion of an individual or
entity under paragraph (1), (2), or (3) of subsection (b),
the period of the exclusion shall be 3 years, unless the
Secretary determines in accordance with published regulations
that a shorter period is appropriate because of mitigating
circumstances or that a longer period is appropriate because
of aggravating circumstances.
``(E) In the case of an exclusion of an individual or
entity under paragraph (4) or (5) of subsection (b), the
period of the exclusion shall not be less than the period
during which the individual's or entity's license to provide
health care is revoked, suspended, or surrendered, or the
individual or the entity is excluded or suspended from a
Federal or State health care program.
``(F) In the case of an exclusion of an individual or
entity under subsection (b)(6)(B), the period of the
exclusion shall be not less than 1 year.''.
SEC. 203. PERMISSIVE EXCLUSION OF INDIVIDUALS WITH OWNERSHIP
OR CONTROL INTEREST IN SANCTIONED ENTITIES.
Section 1128(b) (42 U.S.C. 1320a-7(b)) is amended by adding
at the end the following new paragraph:
``(15) Individuals controlling a sanctioned entity.--Any
individual who has a direct or indirect ownership or control
interest of 5 percent or more, or an ownership or control
interest (as defined in section 1124(a)(3)) in, or who is an
officer or managing employee (as defined in section 1126(b))
of, an entity--
``(A) that has been convicted of any offense described in
subsection (a) or in paragraph (1), (2), or (3) of this
subsection; or
``(B) that has been excluded from participation under a
program under title XVIII or under a State health care
program (as defined in subsection (h)).''.
SEC. 204. SANCTIONS AGAINST PRACTITIONERS AND PERSONS FOR
FAILURE TO COMPLY WITH STATUTORY OBLIGATIONS.
(a) Minimum Period of Exclusion for Practitioners and
Persons Failing To Meet Statutory Obligations.--
(1) In general.--The second sentence of section 1156(b)(1)
(42 U.S.C. 1320c-5(b)(1)) is amended by striking ``may
prescribe)'' and inserting ``may prescribe, except that such
period may not be less than 1 year)''.
(2) Conforming amendment.--Section 1156(b)(2) (42 U.S.C.
1320c-5(b)(2)) is amended by striking ``shall remain'' and
inserting ``shall (subject to the minimum period specified in
the second sentence of paragraph (1)) remain''.
(b) Repeal of ``Unwilling or Unable'' Condition for
Imposition of Sanction.--Section 1156(b)(1) (42 U.S.C. 1320c-
5(b)(1)) is amended--
(1) in the second sentence, by striking ``and determines''
and all that follows through ``such obligations,''; and
(2) by striking the third sentence.
SEC. 205. SANCTIONS AGAINST PROVIDERS FOR EXCESSIVE FEES OR
PRICES.
Section 1128(b)(6)(A) (42 U.S.C. 1320a-7(b)(6)(A)) is
amended--
(1) by inserting ``(as specified by the Secretary in
regulations)'' after ``substantially in excess of such
individual's or entity's usual charges''; and
(2) by striking ``(or, in applicable cases, substantially
in excess of such individual's or entity's costs)'' and
inserting ``, costs or fees''.
SEC. 206. APPLICABILITY OF THE BANKRUPTCY CODE TO PROGRAM
SANCTIONS.
(a) Exclusion of Individuals and Entities From
Participation in Federal Health Care Programs.--Section 1128
(42 U.S.C. 1320a-7) is amended by adding at the end the
following new subsection:
``(j) Applicability of Bankruptcy Provisions.--An exclusion
imposed under this section is not subject to the automatic
stay imposed under section 362 of title 11, United States
Code.''.
(b) Civil Monetary Penalties.--Section 1128A(a) (42 U.S.C.
1320a-7a(a)) is amended by adding at the end the following
sentence: ``An exclusion imposed under this subsection is not
subject to the automatic stay imposed under section 362 of
title 11, United States Code, and any penalties and
assessments imposed under this section shall be
nondischargeable under the provisions of such title.''.
(c) Offset of Payments to Individuals.--Section 1892(a)(4)
(42 U.S.C. 1395ccc(a)(4)) is amended by adding at the end the
following
[[Page S6091]]
sentence: ``An exclusion imposed under paragraph (2)(C)(ii)
or paragraph (3)(B) is not subject to the automatic stay
imposed under section 362 of title 11, United States Code.''.
SEC. 207. INTERMEDIATE SANCTIONS FOR MEDICARE HEALTH
MAINTENANCE ORGANIZATIONS.
(a) Application of Intermediate Sanctions for Program
Violations.--
(1) In general.--Section 1876(i)(1) (42 U.S.C.
1395mm(i)(1)) is amended by striking ``the Secretary may
terminate'' and all that follows and inserting ``in
accordance with procedures established under paragraph (9),
the Secretary may at any time terminate any such contract or
may impose the intermediate sanctions described in paragraph
(6)(B) or (6)(C) (whichever is applicable) on the eligible
organization if the Secretary determines that the
organization--
``(A) has failed substantially to carry out the contract;
``(B) is carrying out the contract in a manner
substantially inconsistent with the efficient and effective
administration of this section; or
``(C) no longer substantially meets the applicable
conditions of subsections (b), (c), (e), and (f).''.
(2) Other intermediate sanctions for miscellaneous program
violations.--Section 1876(i)(6) (42 U.S.C. 1395mm(i)(6)) is
amended by adding at the end the following new subparagraph:
``(C) In the case of an eligible organization for which the
Secretary makes a determination under paragraph (1), the
basis of which is not described in subparagraph (A), the
Secretary may apply the following intermediate sanctions:
``(i) Civil money penalties of not more than $25,000 for
each determination under paragraph (1) if the deficiency that
is the basis of the determination has directly adversely
affected (or has the substantial likelihood of adversely
affecting) an individual covered under the organization's
contract.
``(ii) Civil money penalties of not more than $10,000 for
each week beginning after the initiation of procedures by the
Secretary under paragraph (9) during which the deficiency
that is the basis of a determination under paragraph (1)
exists.
``(iii) Suspension of enrollment of individuals under this
section after the date the Secretary notifies the
organization of a determination under paragraph (1) and until
the Secretary is satisfied that the deficiency that is the
basis for the determination has been corrected and is not
likely to recur.''.
(3) Procedures for imposing sanctions.--Section 1876(i) (42
U.S.C. 1395mm(i)) is amended by adding at the end the
following new paragraph:
``(9) The Secretary may terminate a contract with an
eligible organization under this section or may impose the
intermediate sanctions described in paragraph (6) on the
organization in accordance with formal investigation and
compliance procedures established by the Secretary under
which--
``(A) the Secretary first provides the organization with
the reasonable opportunity to develop and implement a
corrective action plan to correct the deficiencies that were
the basis of the Secretary's determination under paragraph
(1) and the organization fails to develop or implement such a
plan;
``(B) in deciding whether to impose sanctions, the
Secretary considers aggravating factors such as whether an
entity has a history of deficiencies or has not taken action
to correct deficiencies the Secretary has brought to their
attention;
``(C) there are no unreasonable or unnecessary delays
between the finding of a deficiency and the imposition of
sanctions; and
``(D) the Secretary provides the organization with
reasonable notice and opportunity for hearing (including the
right to appeal an initial decision) before imposing any
sanction or terminating the contract.''.
(4) Conforming amendments.--Section 1876(i)(6)(B) (42
U.S.C. 1395mm(i)(6)(B)) is amended by striking the second
sentence.
(b) Agreements With Peer Review Organizations.--
(1) Requirement for written agreement.--Section
1876(i)(7)(A) (42 U.S.C. 1395mm(i)(7)(A)) is amended by
striking ``an agreement'' and inserting ``a written
agreement''.
(2) Development of model agreement.--Not later than July 1,
1997, the Secretary shall develop a model of the agreement
that an eligible organization with a risk-sharing contract
under section 1876 of the Social Security Act (42 U.S.C.
1395mm) must enter into with an entity providing peer review
services with respect to services provided by the
organization under section 1876(i)(7)(A) of such Act (42
U.S.C. 1395mm(i)(7)(A)).
(3) Report by gao.--
(A) Study.--The Comptroller General of the United States
shall conduct a study of the costs incurred by eligible
organizations with risk-sharing contracts under section 1876
of such Act (42 U.S.C. 1395mm(b)) of complying with the
requirement of entering into a written agreement with an
entity providing peer review services with respect to
services provided by the organization, together with an
analysis of how information generated by such entities is
used by the Secretary to assess the quality of services
provided by such eligible organizations.
(B) Report to congress.--Not later than July 1, 1998, the
Comptroller General shall submit a report to the Committee on
Ways and Means and the Committee on Commerce of the House of
Representatives and the Committee on Finance and the Special
Committee on Aging of the Senate on the study conducted under
subparagraph (A).
SEC. 208. LIABILITY OF MEDICARE CARRIERS AND FISCAL
INTERMEDIARIES AND STATES FOR CLAIMS SUBMITTED
BY EXCLUDED PROVIDERS.
(a) Reimbursement to the Secretary for Amounts Paid to
Excluded Providers.--
(1) Requirements for fiscal intermediaries.--
(A) In general.--Section 1816 (42 U.S.C. 1395h), is amended
by adding at the end the following new subsection:
``(l) An agreement with an agency or organization under
this section shall require that such agency or organization
reimburse the Secretary for any amounts paid for a service
under this title which is furnished, directed, or prescribed
by an individual or entity during any period for which the
individual or entity is excluded pursuant to section 1128,
1128A, or 1156, from participation in the program under this
title, if the amounts are paid after the Secretary notifies
the agency or organization of the exclusion.''.
(B) Conforming amendment.--Section 1816(i) (42 U.S.C.
1395h(i)) is amended by adding at the end the following new
paragraph:
``(4) Nothing in this subsection shall be construed to
prohibit reimbursement by an agency or organization under
subsection (l).''.
(2) Requirements for carriers.--Section 1842(b)(3) (42
U.S.C. 1395u(b)(3)) is amended--
(A) by striking ``and'' at the end of subparagraph (I); and
(B) by inserting after subparagraph (I) the following new
subparagraph:
``(J) will reimburse the Secretary for any amounts paid for
an item or service under this part which is furnished,
directed, or prescribed by an individual or entity during any
period for which the individual or entity is excluded
pursuant to section 1128, 1128A, or 1156 from participation
in the program under this title, if the amounts are paid
after the Secretary notifies the carrier of the exclusion;
and''.
(3) Requirements for states.--Section 1902(a)(39) (42
U.S.C. 1396a(a)(39)) is amended by striking the semicolon at
the end and inserting ``, and provide further for
reimbursement to the Secretary of any payments made under the
plan for any item or service furnished, directed, or
prescribed by the excluded individual or entity during such
period, after the Secretary notifies the State of such
exclusion;''.
(b) Conforming Repeal of Mandatory Payment Rule.--Section
1862(e)(2) (42 U.S.C. 1395y(e)(2)) is amended to read as
follows:
``(2) No individual or entity may bill (or collect any
amount from) any individual for any item or service for which
payment is denied under paragraph (1). No person is liable
for payment of any amounts billed for such an item or service
in violation of the previous sentence.''.
SEC. 209. EFFECTIVE DATE.
The amendments made by this title shall take effect January
1, 1997.
TITLE III--ADMINISTRATIVE AND MISCELLANEOUS PROVISIONS
SEC. 301. ESTABLISHMENT OF THE HEALTH CARE FRAUD AND ABUSE
DATA COLLECTION PROGRAM.
(a) General Purpose.--Not later than January 1, 1997, the
Secretary shall establish a national health care fraud and
abuse data collection program for the reporting of final
adverse actions (not including settlements in which no
findings of liability have been made) against health care
providers, suppliers, or practitioners as required by
subsection (b), with access as set forth in subsection (c),
and shall maintain a database of the information collected
under this section.
(b) Reporting of Information.--
(1) In general.--Each Government agency and health plan
shall report any final adverse action (not including
settlements in which no findings of liability have been made)
taken against a health care provider, supplier, or
practitioner.
(2) Information to be reported.--The information to be
reported under paragraph (1) includes the following:
(A) The name and TIN (as defined in section 7701(a)(41) of
the Internal Revenue Code of 1986) of any health care
provider, supplier, or practitioner who is the subject of a
final adverse action.
(B) The name (if known) of any health care entity with
which a health care provider, supplier, or practitioner, who
is the subject of a final adverse action, is affiliated or
associated.
(C) The nature of the final adverse action and whether such
action is on appeal.
(D) A description of the acts or omissions and injuries
upon which the final adverse action was based, and such other
information as the Secretary determines by regulation is
required for appropriate interpretation of information
reported under this section.
(3) Confidentiality.--In determining what information is
required, the Secretary shall include procedures to assure
that the privacy of individuals receiving health care
services is appropriately protected.
(4) Timing and form of reporting.--The information required
to be reported under this subsection shall be reported
regularly (but not less often than monthly) and in such form
and manner as the Secretary of Health and Human Services (in
this section referred to as the ``Secretary'') prescribes.
Such information shall first be required to be reported on a
date specified by the Secretary.
[[Page S6092]]
(5) To whom reported.--The information required to be
reported under this subsection shall be reported to the
Secretary.
(c) Disclosure and Correction of Information.--
(1) Disclosure.--With respect to the information about
final adverse actions (not including settlements in which no
findings of liability have been made) reported to the
Secretary under this section with respect to a health care
provider, supplier, or practitioner, the Secretary shall, by
regulation, provide for--
(A) disclosure of the information, upon request, to the
health care provider, supplier, or licensed practitioner, and
(B) procedures in the case of disputed accuracy of the
information.
(2) Corrections.--Each Government agency and health plan
shall report corrections of information already reported
about any final adverse action taken against a health care
provider, supplier, or practitioner, in such form and manner
that the Secretary prescribes by regulation.
(d) Access to Reported Information.--
(1) Availability.--The information in the database
maintained under this section shall be available to Federal
and State government agencies, health plans, and the public
pursuant to procedures that the Secretary shall provide by
regulation.
(2) Fees for disclosure.--The Secretary may establish or
approve reasonable fees for the disclosure of information in
such database (other than with respect to requests by Federal
agencies). The amount of such a fee may be sufficient to
recover the full costs of carrying out the provisions of this
section, including reporting, disclosure, and administration.
Such fees shall be available to the Secretary or, in the
Secretary's discretion to the agency designated under this
section to cover such costs.
(e) Protection From Liability for Reporting.--No person or
entity shall be held liable in any civil action with respect
to any report made as required by this section, without
knowledge of the falsity of the information contained in the
report.
(f) Definitions and Special Rules.--For purposes of this
section:
(1) Final adverse action.--
(A) In general.--The term ``final adverse action'' includes
the following:
(i) Civil judgments against a health care provider or
practitioner in Federal or State court related to the
delivery of a health care item or service.
(ii) Federal or State criminal convictions related to the
delivery of a health care item or service.
(iii) Actions by Federal or State agencies responsible for
the licensing and certification of health care providers,
suppliers, and licensed health care practitioners,
including--
(I) formal or official actions, such as revocation or
suspension of a license (and the length of any such
suspension), reprimand, censure, or probation,
(II) any other loss of license, or the right to apply for
or renew a license of the provider, supplier, or
practitioner, whether by operation of law, voluntary
surrender, nonrenewability, or otherwise, or
(III) any other negative action or finding by such Federal
or State agency that is publicly available information.
(iv) Exclusion from participation in Federal or State
health care programs (as defined in section 1128B(f) and
1128(h), respectively).
(v) Any other adjudicated actions or decisions that the
Secretary shall establish by regulation.
(B) Exclusion.--The term does not include any action with
respect to a malpractice claim.
(C) Special rule.--For purposes of this paragraph, the
existence of a conviction shall be determined under section
1128(i) of the Social Security Act (42 U.S.C. 1320a-7(i)).
(2) Licensed health care practitioner.--The terms
``licensed health care practitioner'', ``licensed
practitioner'', and ``practitioner'' mean, with respect to a
State, an individual who is licensed or otherwise authorized
by the State to provide health care services (or any
individual who, without authority holds himself or herself
out to be so licensed or authorized).
(3) Health care provider.--The term ``health care
provider'' means a provider of services as defined in section
1861(u) of the Social Security Act (42 U.S.C. 1395x(u)), and
any person or entity, including a health maintenance
organization, group medical practice, or any other entity
listed by the Secretary in regulation, that provides health
care services.
(4) Supplier.--The term ``supplier'' means a supplier of
health care items and services described in subsections (a)
and (b) of section 1819, and section 1861 of the Social
Security Act (42 U.S.C. 1395i-3 (a) and (b), and 1395x).
(5) Government agency.--The term ``Government agency''
shall include the following:
(A) The Department of Justice.
(B) The Department of Health and Human Services.
(C) Any other Federal agency that either administers or
provides payment for the delivery of health care services,
including, but not limited to the Department of Defense and
the Veterans' Administration.
(D) State law enforcement agencies.
(E) State medicaid fraud and abuse units.
(F) Federal or State agencies responsible for the licensing
and certification of health care providers and licensed
health care practitioners.
(6) Health plan.--The term ``health plan'' has the meaning
given such term by section 1128C(c) of the Social Security
Act, as added by section 101(a) of this Act.
(g) Conforming Amendment.--Section 1921(d) (42 U.S.C.
1396r-2(d)) is amended by inserting ``and section 301 of the
Medicare Antifraud Act of 1996'' after ``section 422 of the
Health Care Quality Improvement Act of 1986''.
SEC. 302. INSPECTOR GENERAL ACCESS TO NATIONAL PRACTITIONER
DATA BANK.
Section 427 of the Health Care Quality Improvement Act of
1986 (42 U.S.C. 11137) is amended--
(1) in subsection (a), by adding at the end the following
sentence: ``Information reported under this part shall also
be made available, upon request, to the Inspector General of
the Departments of Health and Human Services, Defense, and
Labor, the Office of Personnel Management, and the Railroad
Retirement Board.''; and
(2) by amending subsection (b)(4) to read as follows:
``(4) Fees.--The Secretary may impose fees for the
disclosure of information under this part sufficient to
recover the full costs of carrying out the provisions of this
part, including reporting, disclosure, and administration,
except that a fee may not be imposed for requests made by the
Inspector General of the Department of Health and Human
Services. Such fees shall remain available to the Secretary
(or, in the Secretary's discretion, to the agency designated
in section 424(b)) until expended.''.
SEC. 303. CORPORATE WHISTLEBLOWER PROGRAM.
Title XI (42 U.S.C. 1301 et seq.), as amended by section
101(a), is amended by inserting after section 1128C the
following new section:
``CORPORATE WHISTLEBLOWER PROGRAM
``Sec. 1128D. (a) Establishment of Program.--The Secretary,
through the Inspector General of the Department of Health and
Human Services, shall establish a procedure whereby
corporations, partnerships, and other legal entities
specified by the Secretary, may voluntarily disclose
instances of unlawful conduct and seek to resolve liability
for such conduct through means specified by the Secretary.
``(b) Limitation.--No person may bring an action under
section 3730(b) of title 31, United States Code, if, on the
date of filing--
``(1) the matter set forth in the complaint has been
voluntarily disclosed to the United States by the proposed
defendant and the defendant has been accepted into the
voluntary disclosure program established pursuant to
subsection (a); and
``(2) any new information provided in the complaint under
such section does not add substantial grounds for additional
recovery beyond those encompassed within the scope of the
voluntary disclosure.''.
SEC. 304. HOME HEALTH BILLING, PAYMENT, AND COST LIMIT
CALCULATION TO BE BASED ON SITE WHERE SERVICE
IS FURNISHED.
(a) Conditions of Participation.--Section 1891 (42 U.S.C.
1395bbb) is amended by adding at the end the following new
subsection:
``(g) A home health agency shall submit claims for payment
of home health services under this title only on the basis of
the geographic location at which the service is furnished, as
determined by the Secretary.''.
(b) Wage Adjustment.--Section 1861(v)(1)(L)(iii) (42 U.S.C.
1395x(v)(1)(L)(iii)) is amended by striking ``agency is
located'' and inserting ``service is furnished''.
SEC. 305. APPLICATION OF INHERENT REASONABLENESS.
(a) In General.--Section 1834(a)(10)(B) (42 U.S.C.
1395m(a)(10)(B)) is amended--
(1) in the first sentence, by striking ``apply the
provisions'' and all that follows through the period and
inserting ``describe by regulation the factors to be used in
determining the cases (or particular items) in which the
application of this subsection results in the determination
of an amount that, by reason of its being grossly excessive
or grossly deficient, is not inherently reasonable, and to
provide in such cases for the factors that will be considered
in establishing an amount that is realistic and equitable.'';
and
(2) in the second sentence, by striking ``applying such
provisions'' and inserting ``applying the previous provisions
of this subsection''.
(b) Conforming Amendment.--Section 1834(i) (42 U.S.C.
1395m(i)) is amended by adding at the end the following new
paragraph:
``(3) Adjustment for inherent reasonableness.--The
provisions of subsection (a)(10)(B) shall apply to payment
for surgical dressings under this subsection.''.
SEC. 306. CLARIFICATION OF TIME AND FILING LIMITATIONS.
(a) In General.--Section 1862(b)(2)(B) (42 U.S.C.
1395y(b)(2)(B)) is amended by adding at the end the following
new clause:
``(v) Time, filing, and related provisions under primary
plan.--Requirements under a primary plan as to the filing of
a claim, time limitations for the filing of a claim,
information not maintained by the Secretary, or notification
or pre-admission review, shall not apply to a claim by the
United States under clause (ii) or (iii).''.
(b) Effective Date.--The amendment made by subsection (a)
applies to items and services furnished after 1990.
[[Page S6093]]
SEC. 307. CLARIFICATION OF LIABILITY OF THIRD PARTY
ADMINISTRATORS.
(a) In General.--Section 1862(b)(2)(B)(ii) (42 U.S.C.
1395y(b)(2)(B)(ii)) is amended by inserting ``, or which
determines claims under the primary plan'' after ``primary
plan''.
(b) Claims Between Parties Other Than the United States.--
Section 1862(b)(2)(B) (42 U.S.C. 1395y(b)(2)(B)), as amended
by section 306(a) of this Act, is amended by adding at the
end the following new clause:
``(vi) Claims between parties other than the united
states.--A claim by the United States under clause (ii) or
(iii) shall not preclude claims between other parties.''.
(c) Effective Date.--The amendments made by this section
shall apply to items and services furnished after 1990.
SEC. 308. CLARIFICATION OF PAYMENT AMOUNTS TO MEDICARE.
(a) In General.--Section 1862(b)(2)(B)(i) (42 U.S.C.
1395y(b)(2)(B)(i)) is amended to read as follows:
``(i) Repayment required.--
``(I) In general.--Any payment under this title, with
respect to any item or service for which payment by a primary
plan is required under the preceding provisions of this
subsection, shall be conditioned on reimbursement to the
appropriate Trust Fund established by this title when notice
or other information is received that payment for that item
or service has been or should have been made under those
provisions. If reimbursement is not made to the appropriate
Trust Fund before the expiration of the 60-day period that
begins on the date such notice or other information is
received, the Secretary may charge interest (beginning with
the date on which the notice or other information is
received) on the amount of the reimbursement until
reimbursement is made (at a rate determined by the Secretary
in accordance with regulations of the Secretary of the
Treasury applicable to charges for late payments).
``(II) Determination of amount owed.--The amount owed by a
primary plan under the first sentence of subclause (I) is the
lesser of the full primary payment required (if that amount
is readily determinable) and the amount paid under this title
for that item or service.''.
(b) Conforming and Technical Amendments.--
(1) Subparagraphs (A)(i)(I) and (B)(i) of section
1862(b)(1) (42 U.S.C. 1395y(b)(1)) are each amended by
inserting ``(or eligible to be covered)'' after ``covered''.
(2) Section 1862(b)(1)(C)(ii) (42 U.S.C.
1395y(b)(1)(C)(ii)) is amended by striking ``covered by such
plan''.
(3) The matter in section 1862(b)(2)(A) (42 U.S.C.
1395y(b)(2)(A)) preceding clause (i) is amended by striking
``, except as provided in subparagraph (B),''.
(c) Effective Date.--The amendments made by this section
shall apply to items and services furnished after 1990.
SEC. 309. INCREASED FLEXIBILITY IN CONTRACTING FOR MEDICARE
CLAIMS PROCESSING.
(a) Carriers To Include Entities That Are Not Insurance
Companies.--The matter in section 1842(a) (42 U.S.C.
1395u(a)) preceding paragraph (1) is amended by striking
``with carriers'' and inserting ``with agencies and
organizations (referred to as carriers)''.
(b) Repeal.--Section 1842(f) (42 U.S.C. 1395u(f)) is
repealed.
TITLE IV--CIVIL MONETARY PENALTIES
SEC. 401. SOCIAL SECURITY ACT CIVIL MONETARY PENALTIES.
(a) General Civil Monetary Penalties.--Section 1128A (42
U.S.C. 1320a-7a) is amended as follows:
(1) In the third sentence of subsection (a), by striking
``programs under title XVIII'' and inserting ``Federal health
care programs (as defined in section 1128B(f))''.
(2) In subsection (f)--
(A) by redesignating paragraph (3) as paragraph (4); and
(B) by inserting after paragraph (2) the following new
paragraph:
``(3) With respect to amounts recovered arising out of a
claim under a Federal health care program (as defined in
section 1128B(f)), the portion of such amounts as is
determined to have been paid by the program shall be repaid
to the program, and the portion of such amounts attributable
to the amounts recovered under this section by reason of the
amendments made by the Medicare Antifraud Act of 1996 (as
estimated by the Secretary) shall be deposited into the
Health Care Fraud and Abuse Control Account established under
section 101(b) of such Act.''.
(3) In subsection (i)--
(A) in paragraph (2), by striking ``title V, XVIII, XIX, or
XX of this Act'' and inserting ``a Federal health care
program (as defined in section 1128B(f))'';
(B) in paragraph (4), by striking ``a health insurance or
medical services program under title XVIII or XIX of this
Act'' and inserting ``a Federal health care program (as so
defined)''; and
(C) in paragraph (5), by striking ``title V, XVIII, XIX, or
XX'' and inserting ``a Federal health care program (as so
defined)''.
(4) By adding at the end the following new subsection:
``(m)(1) For purposes of this section, with respect to a
Federal health care program not contained in this Act,
references to the Secretary in this section shall be deemed
to be references to the Secretary or Administrator of the
department or agency with jurisdiction over such program and
references to the Inspector General of the Department of
Health and Human Services in this section shall be deemed to
be references to the Inspector General of the applicable
department or agency.
``(2)(A) The Secretary and Administrator of the departments
and agencies referred to in paragraph (1) may include in any
action pursuant to this section, claims within the
jurisdiction of other Federal departments or agencies as long
as the following conditions are satisfied:
``(i) The case primarily involves claims submitted to the
Federal health care programs of the department or agency
initiating the action.
``(ii) The Secretary or Administrator of the department or
agency initiating the action gives notice and an opportunity
to participate in the investigation to the Inspector General
of the department or agency with primary jurisdiction over
the Federal health care programs to which the claims were
submitted.
``(B) If the conditions specified in subparagraph (A) are
fulfilled, the Inspector General of the department or agency
initiating the action is authorized to exercise all powers
granted under the Inspector General Act of 1978 (5 U.S.C.
App.) with respect to the claims submitted to the other
departments or agencies to the same manner and extent as
provided in that Act with respect to claims submitted to such
departments or agencies.''.
(b) Excluded Individual Retaining Ownership or Control
Interest in Participating Entity.--Section 1128A(a) (42
U.S.C. 1320a-7a(a)) is amended--
(1) by striking ``or'' at the end of paragraph (1)(D);
(2) by striking ``, or'' at the end of paragraph (2) and
inserting a semicolon;
(3) by striking the semicolon at the end of paragraph (3)
and inserting ``; or''; and
(4) by inserting after paragraph (3) the following new
paragraph:
``(4) in the case of a person who is not an organization,
agency, or other entity, is excluded from participating in a
program under title XVIII or a State health care program in
accordance with this subsection or under section 1128 and
who, at the time of a violation of this subsection, retains a
direct or indirect ownership or control interest of 5 percent
or more, or an ownership or control interest (as defined in
section 1124(a)(3)) in, or who is an officer or managing
employee (as defined in section 1126(b)) of, an entity that
is participating in a program under title XVIII or a State
health care program;''.
(c) Employer Billing for Services Furnished, Directed, or
Prescribed by an Excluded Employee.--Section 1128A(a)(1) (42
U.S.C. 1320a-7a(a)(1)), as amended by subsection (b), is
amended--
(1) by striking ``or'' at the end of subparagraph (C);
(2) by striking the semicolon at the end of subparagraph
(D) and inserting ``, or''; and
(3) by adding at the end the following new subparagraph:
``(E) is for a medical or other item or service furnished,
directed, or prescribed by an individual who is an employee
or agent of the person during a period in which such employee
or agent was excluded from the program under which the claim
was made on any of the grounds for exclusion described in
subparagraph (D);''.
(d) Civil Money Penalties for Items or Services Furnished,
Directed, or Prescribed by an Excluded Individual.--Section
1128A(a)(1)(D) (42 U.S.C. 1320a-7a(a)(1)(D)) is amended by
inserting ``, directed, or prescribed'' after ``furnished''.
(e) Modifications of Amounts of Penalties and
Assessments.--Section 1128A(a) (42 U.S.C. 1320a-7a(a)), as
amended by subsection (b), is amended in the matter following
paragraph (4)--
(1) by striking ``$2,000'' and inserting ``$10,000'';
(2) by inserting ``; in cases under paragraph (4), $10,000
for each day the prohibited relationship occurs'' after
``false or misleading information was given''; and
(3) by striking ``twice the amount'' and inserting ``3
times the amount''.
(f) Claim for Item or Service Based on Incorrect Coding or
Medically Unnecessary Services.--Section 1128A(a)(1) (42
U.S.C. 1320a-7a(a)(1)), as amended by subsection (c), is
amended--
(1) in subparagraph (A) by striking ``claimed,'' and
inserting ``claimed, including any person who engages in a
pattern or practice of presenting or causing to be presented
a claim for an item or service that is based on a code that
the person knows or has reason to know will result in a
greater payment to the person than the code the person knows
or has reason to know is applicable to the item or service
actually provided,'';
(2) in subparagraph (D), by striking ``or'' at the end; and
(3) in subparagraph (E), by striking the semicolon and
inserting``, or''; and
(4) by inserting after subparagraph (E) the following new
subparagraph:
``(F) is for a medical or other item or service that a
person knows or has reason to know is not medically
necessary;''.
(g) Permitting Secretary To Impose Civil Monetary Penalty
for Kickback Violations.--Section 1128A(b) (42 U.S.C. 1320a-
7a(a)) is amended by adding the following new paragraph:
``(3) Any person (including any organization, agency, or
other entity, but excluding a beneficiary as defined in
subsection (i)(5)) who the Secretary determines has violated
section 1128B(b) of this title shall be subject to a civil
monetary penalty of not more than $10,000 for each such
violation. In addition,
[[Page S6094]]
such person shall be subject to an assessment of not more
than twice the total amount of the remuneration offered,
paid, solicited, or received in violation of section
1128B(b). The total amount of remuneration subject to an
assessment shall be calculated without regard to whether some
portion thereof also may have been intended to serve a
purpose other than one proscribed by section 1128B(b).''.
(h) Sanctions Against Practitioners and Persons for Failure
To Comply With Statutory Obligations.--Section 1156(b)(3) (42
U.S.C. 1320c-5(b)(3)) is amended by striking ``the actual or
estimated cost'' and inserting ``up to $10,000 for each
instance''.
(i) Procedural Provisions.--Section 1876(i)(6) (42 U.S.C.
1395mm(i)(6)), as amended by section 207(a)(2), is amended by
adding at the end the following new subparagraph:
``(D) The provisions of section 1128A (other than
subsections (a) and (b)) shall apply to a civil money penalty
under subparagraph (A) or (B) in the same manner as they
apply to a civil money penalty or proceeding under section
1128A(a).''.
(j) Prohibition Against Offering Inducements to Individuals
Enrolled Under Programs or Plans.--
(1) Offer of remuneration.--Section 1128A(a) (42 U.S.C.
1320a-7a(a)), as amended by subsection (b), is amended--
(A) by striking ``, or'' at the end of paragraph (3) and
inserting a semicolon;
(B) by striking the semicolon at the end of paragraph (4)
and inserting ``; or''; and
(C) by inserting after paragraph (4) the following new
paragraph:
``(5) offers to or transfers remuneration to any individual
eligible for benefits under title XVIII of this Act, or under
a State health care program (as defined in section 1128(h))
that such person knows or should know is likely to influence
such individual to order or receive from a particular
provider, practitioner, or supplier any item or service for
which payment may be made, in whole or in part, under title
XVIII, or a State health care program (as so defined);''.
(2) Remuneration defined.--Section 1128A(i) (42 U.S.C.
1320a-7a(i)) is amended by adding the following new
paragraph:
``(6) The term `remuneration' includes the waiver of
coinsurance and deductible amounts (or any part thereof), and
transfers of items or services for free or for other than
fair market value. The term `remuneration' does not include--
``(A) the waiver of coinsurance and deductible amounts by a
person, if--
``(i) the waiver is not offered as part of any
advertisement or solicitation;
``(ii) the person does not routinely waive coinsurance or
deductible amounts; and
``(iii) the person--
``(I) waives the coinsurance and deductible amounts after
determining in good faith that the individual is in financial
need;
``(II) fails to collect coinsurance or deductible amounts
after making reasonable collection efforts; or
``(III) provides for any permissible waiver as specified in
section 1128B(b)(3) or in regulations issued by the
Secretary;
``(B) differentials in coinsurance and deductible amounts
as part of a benefit plan design as long as the differentials
have been disclosed in writing to all beneficiaries, third
party payors, and providers, to whom claims are presented and
as long as the differentials meet the standards as defined in
regulations promulgated by the Secretary not later than 180
days after the date of the enactment of the Medicare
Antifraud Act of 1996; or
``(C) incentives given to individuals to promote the
delivery of preventive care as determined by the Secretary in
regulations so promulgated.''.
(k) Effective Date.--The amendments made by this section
shall take effect January 1, 1997.
TITLE V--AMENDMENTS TO CRIMINAL LAW
SEC. 501. HEALTH CARE FRAUD.
(a) In General.--
(1) Fines and imprisonment for health care fraud
violations.--Chapter 63 of title 18, United States Code, is
amended by adding at the end the following new section:
``Sec. 1347. Health care fraud
``(a) Whoever knowingly and willfully executes, or attempts
to execute, a scheme or artifice--
``(1) to defraud any health plan or other person, in
connection with the delivery of or payment for health care
benefits, items, or services; or
``(2) to obtain, by means of false or fraudulent pretenses,
representations, or promises, any of the money or property
owned by, or under the custody or control of, any health
plan, or person in connection with the delivery of or payment
for health care benefits, items, or services;
shall be fined under this title or imprisoned not more than
10 years, or both. If the violation results in serious bodily
injury (as defined in section 1365(g)(3) of this title), such
person may be imprisoned for any term of years.
``(b) For purposes of this section, the term `health plan'
has the same meaning given such term in section 1128C(c) of
the Social Security Act.''.
(2) Clerical amendment.--The table of sections at the
beginning of chapter 63 of title 18, United States Code, is
amended by adding at the end the following:
``1347. Health care fraud.''.
(b) Criminal Fines Deposited in the Health Care Fraud and
Abuse Control Account.--The Secretary of the Treasury shall
deposit into the Health Care Fraud and Abuse Control Account
established under section 101(b) an amount equal to the
criminal fines imposed under section 1347 of title 18, United
States Code (relating to health care fraud).
SEC. 502. FORFEITURES FOR FEDERAL HEALTH CARE OFFENSES.
(a) In General.--Section 982(a) of title 18, United States
Code, is amended by adding after paragraph (5) the following
new paragraph:
``(6)(A) The court, in imposing sentence on a person
convicted of a Federal health care offense, shall order the
person to forfeit property, real or personal, that
constitutes or is derived, directly or indirectly, from
proceeds traceable to the commission of the offense.
``(B) For purposes of this paragraph, the term `Federal
health care offense' means a violation of, or a criminal
conspiracy to violate--
``(i) section 1347 of this title;
``(ii) section 1128B of the Social Security Act;
``(iii) section 287, 371, 664, 666, 1001, 1027, 1341, 1343,
1920, or 1954 of this title if the violation or conspiracy
relates to health care fraud; and
``(iv) section 501 or 511 of the Employee Retirement Income
Security Act of 1974, if the violation or conspiracy relates
to health care fraud.''.
(b) Property Forfeited Deposited in Health Care Fraud and
Abuse Control Account.--The Secretary of the Treasury shall
deposit into the Health Care Fraud and Abuse Control Account
established under section 101(b) an amount equal to amounts
resulting from forfeiture of property by reason of a Federal
health care offense pursuant to section 982(a)(6) of title
18, United States Code.
SEC. 503. INJUNCTIVE RELIEF RELATING TO FEDERAL HEALTH CARE
OFFENSES.
(a) In General.--Section 1345(a)(1) of title 18, United
States Code, is amended--
(1) by striking ``or'' at the end of subparagraph (A);
(2) by inserting ``or'' at the end of subparagraph (B); and
(3) by adding at the end the following new subparagraph:
``(C) committing or about to commit a Federal health care
offense (as defined in section 982(a)(6)(B) of this
title);''.
(b) Freezing of Assets.--Section 1345(a)(2) of title 18,
United States Code, is amended by inserting ``or a Federal
health care offense (as defined in section 982(a)(6)(B))''
after ``title)''.
SEC. 504. GRAND JURY DISCLOSURE.
Section 3322 of title 18, United States Code, is amended--
(1) by redesignating subsections (c) and (d) as subsections
(d) and (e), respectively; and
(2) by inserting after subsection (b) the following new
subsection:
``(c) A person who is privy to grand jury information
concerning a Federal health care offense (as defined in
section 982(a)(6)(B))--
``(1) received in the course of duty as an attorney for the
Government; or
``(2) disclosed under rule 6(e)(3)(A)(ii) of the Federal
Rules of Criminal Procedure;
may disclose that information to an attorney for the
Government to use in any investigation or civil proceeding
relating to health care fraud.''.
SEC. 505. FALSE STATEMENTS.
(a) In General.--Chapter 47, of title 18, United States
Code, is amended by adding at the end the following new
section:
``Sec. 1035. False statements relating to health care matters
``(a) Whoever, in any matter involving a health plan,
knowingly and willfully falsifies, conceals, or covers up by
any trick, scheme, or device a material fact, or makes any
false, fictitious, or fraudulent statements or
representations, or makes or uses any false writing or
document knowing the same to contain any false, fictitious,
or fraudulent statement or entry, shall be fined under this
title or imprisoned not more than 5 years, or both.
``(b) For purposes of this section, the term `health plan'
has the same meaning given such term in section 1128C(c) of
the Social Security Act.''.
(b) Clerical Amendment.--The table of sections at the
beginning of chapter 47 of title 18, United States Code, in
amended by adding at the end the following:
``1035. False statements relating to health care matters.''.
SEC. 506. OBSTRUCTION OF CRIMINAL INVESTIGATIONS, AUDITS, OR
INSPECTIONS OF FEDERAL HEALTH CARE OFFENSES.
(a) In General.--Chapter 73 of title 18, United States
Code, is amended by adding at the end the following new
section:
``Sec. 1518. Obstruction of criminal investigations, audits,
or inspections of Federal health care offenses
``(a) In General.--Whoever willfully prevents, obstructs,
misleads, delays or attempts to prevent, obstruct, mislead,
or delay the communication of information or records relating
to a Federal health care offense to a Federal agent or
employee involved in an investigation, audit, inspection, or
other activity related to such an offense, shall be fined
under this title or imprisoned not more than 5 years, or
both.
``(b) Federal Health Care Offense.--As used in this section
the term `Federal health
[[Page S6095]]
care offense' has the same meaning given such term in section
982(a)(6)(B) of this title.
``(c) Criminal Investigator.--As used in this section the
term `criminal investigator' means any individual duly
authorized by a department, agency, or armed force of the
United States to conduct or engage in investigations for
prosecutions for violations of health care offenses.''.
(b) Clerical Amendment.--The table of sections at the
beginning of chapter 73 of title 18, United States Code, is
amended by adding at the end the following:
``1518. Obstruction of criminal investigations, audits, or inspections
of Federal health care offenses.''.
SEC. 507. THEFT OR EMBEZZLEMENT.
(a) In General.--Chapter 31 of title 18, United States
Code, is amended by adding at the end the following new
section:
``Sec. 669. Theft or embezzlement in connection with health
care
``(a) In General.--Whoever willfully embezzles, steals, or
otherwise without authority willfully and unlawfully converts
to the use of any person other than the rightful owner, or
intentionally misapplies any of the moneys, funds,
securities, premiums, credits, property, or other assets of a
health plan, shall be fined under this title or imprisoned
not more than 10 years, or both.
``(b) Health Plan.--As used in this section the term
`health plan' has the same meaning given such term in section
1128C(c) of the Social Security Act.''.
(b) Clerical Amendment.--The table of sections at the
beginning of chapter 31 of title 18, United States Code, is
amended by adding at the end the following:
``669. Theft or embezzlement in connection with health care.''.
SEC. 508. LAUNDERING OF MONETARY INSTRUMENTS.
Section 1956(c)(7) of title 18, United States Code, is
amended by adding at the end the following new subparagraph:
``(F) Any act or activity constituting an offense involving
a Federal health care offense as that term is defined in
section 982(a)(6)(B) of this title.''.
SEC. 509. AUTHORIZED INVESTIGATIVE DEMAND PROCEDURES.
(a) In General.--Chapter 233 of title 18, United States
Code, is amended by adding after section 3485 the following
new section:
``Sec. 3486. Authorized investigative demand procedures
``(a) Authorization.--
``(1) In any investigation relating to functions set forth
in paragraph (2), the Attorney General or designee may issue
in writing and cause to be served a subpoena compelling
production of any records (including any books, papers,
documents, electronic media, or other objects or tangible
things), which may be relevant to an authorized law
enforcement inquiry, that a person or legal entity may
possess or have care, custody, or control. A custodian of
records may be required to give testimony concerning the
production and authentication of such records. The production
of records may be required from any place in any State or in
any territory or other place subject to the jurisdiction of
the United States at any designated place, except that such
production shall not be required more than 500 miles distant
from the place where the subpoena is served. Witnesses
summoned under this section shall be paid the same fees and
mileage that are paid witnesses in the courts of the United
States. A subpoena requiring the production of records shall
describe the objects required to be produced and prescribe a
return date within a reasonable period of time within which
the objects can be assembled and made available.
``(2) Investigative demands utilizing an administrative
subpoena are authorized for any investigation with respect to
any act or activity constituting or involving health care
fraud, including a scheme or artifice--
``(A) to defraud any health plan or other person, in
connection with the delivery of or payment for health care
benefits, items, or services; or
``(B) to obtain, by means of false or fraudulent pretenses,
representations, or promises, any of the money or property
owned by, or under the custody or control or, any health
plan, or person in connection with the delivery of or payment
for health care benefits, items, or services.
``(b) Service.--A subpoena issued under this section may be
served by any person designated in the subpoena to serve it.
Service upon a natural person may be made by personal
delivery of the subpoena to such person. Service may be made
upon a domestic or foreign association which is subject to
suit under a common name, by delivering the subpoena to an
officer, to a managing or general agent, or to any other
agent authorized by appointment or by law to receive service
of process. The affidavit of the person serving the subpoena
entered on a true copy thereof by the person serving it shall
be proof of service.
``(c) Enforcement.--In the case of contumacy by or refusal
to obey a subpoena issued to any person, the Attorney General
may invoke the aid of any court of the United States within
the jurisdiction of which the investigation is carried on or
of which the subpoenaed person is an inhabitant, or in which
such person carries on business or may be found, to compel
compliance with the subpoena. The court may issue an order
requiring the subpoenaed person to appear before the Attorney
General to produce records, if so ordered, or to give
testimony touching the matter under investigation. Any
failure to obey the order of the court may be punished by the
court as a contempt thereof. All process in any such case may
be served in any judicial district in which such person may
be found.
``(d) Immunity From Civil Liability.--Notwithstanding any
Federal, State, or local law, any person, including officers,
agents, and employees, receiving a subpoena under this
section, who complies in good faith with the subpoena and
thus produces the materials sought, shall not be liable in
any court of any State or the United States to any customer
or other person for such production or for nondisclosure of
that production to the customer.
``(e) Use in Action Against Individuals.--
``(1) Health information about an individual that is
disclosed under this section may not be used in, or disclosed
to any person for use in, any administrative, civil, or
criminal action or investigation directed against the
individual who is the subject of the information unless the
action or investigation arises out of and is directly related
to receipt of health care or payment for health care or
action involving a fraudulent claim related to health, or if
authorized by an appropriate order of a court of competent
jurisdiction, granted after application showing good cause
therefore.
``(2) In assessing good cause, the court shall weigh the
public interest and the need for disclosure against the
injury to the patient, to the physician-patient relationship,
and to the treatment services.
``(3) Upon the granting of such order, the court, in
determining the extent to which any disclosure of all or any
part of any record is necessary, shall impose appropriate
safeguards against unauthorized disclosure.
``(f) Health Plan.--As used in this section, the term
`health plan' has the same meaning given such term in section
1128C(c) of the Social Security Act.''.
(b) Clerical Amendment.--The table of sections for chapter
223 of title 18, United States Code, is amended by inserting
after the item relating to section 3485 the following new
item:
``3486. Authorized investigative demand procedures.''.
(c) Conforming Amendment.--Section 1510(b)(3)(B) of title
18, United States Code, is amended by inserting ``or a
Department of Justice subpoena (issued under section 3486),''
after ``subpoena''.
TITLE VI--STATE HEALTH CARE FRAUD CONTROL UNITS
SEC. 601. STATE HEALTH CARE FRAUD CONTROL UNITS.
(a) Extension of Concurrent Authority To Investigate and
Prosecute Fraud in Other Federal Programs.--Section
1903(q)(3) (42 U.S.C. 1396b(q)(3)) is amended--
(1) by inserting ``(A)'' after ``in connection with''; and
(2) by striking ``title.'' and inserting ``title; and (B)
in cases where the entity's function is also described by
subparagraph (A), and upon the approval of the relevant
Federal agency, any aspect of the provision of health care
services and activities of providers of such services under
any Federal health care program (as defined in section
1128B(b)(1)).''.
(b) Extension of Authority To Investigate and Prosecute
Patient Abuse in Non-Medicaid Board and Care Facilities.--
Section 1903(q)(4) (42 U.S.C. 1396b(q)(4)) is amended to read
as follows:
``(4)(A) The entity has--
``(i) procedures for reviewing complaints of abuse or
neglect of patients in health care facilities which receive
payments under the State plan under this title;
``(ii) at the option of the entity, procedures for
reviewing complaints of abuse or neglect of patients residing
in board and care facilities; and
``(iii) procedures for acting upon such complaints under
the criminal laws of the State or for referring such
complaints to other State agencies for action.
``(B) For purposes of this paragraph, the term `board and
care facility' means a residential setting which receives
payment from or on behalf of two or more unrelated adults who
reside in such facility, and for whom one or both of the
following is provided:
``(i) Nursing care services provided by, or under the
supervision of, a registered nurse, licensed practical nurse,
or licensed nursing assistant.
``(ii) Personal care services that assist residents with
the activities of daily living, including personal hygiene,
dressing, bathing, eating, toileting, ambulation, transfer,
positioning, self-medication, body care, travel to medical
services, essential shopping, meal preparation, laundry, and
housework.''.
TITLE VII--MEDICARE/MEDICAID BILLING ABUSE PREVENTION
SEC. 701. UNIFORM MEDICARE/MEDICAID APPLICATION PROCESS.
Not later than 1 year after the date of the enactment of
this Act, the Secretary of Health and Human Services (in this
title referred to as the ``Secretary'') shall establish
procedures and a uniform application form for use by any
individual or entity that seeks to participate in the
programs under titles XVIII and XIX of the Social Security
Act (42 U.S.C. 1395 et seq.; 42 U.S.C. 1396 et seq.). The
procedures established shall include the following:
(1) Execution of a standard authorization form by all
individuals and entities prior to submission of claims for
payment which shall include the social security number of
[[Page S6096]]
the beneficiary and the TIN (as defined in section
7701(a)(41) of the Internal Revenue Code of 1986) of any
health care provider, supplier, or practitioner providing
items or services under the claim.
(2) Assumption of responsibility and liability for all
claims submitted.
(3) A right of access by the Secretary to provider records
relating to items and services rendered to beneficiaries of
such programs.
(4) Retention of source documentation.
(5) Provision of complete and accurate documentation to
support all claims for payment.
(6) A statement of the legal consequences for the
submission of false or fraudulent claims for payment.
SEC. 702. STANDARDS FOR UNIFORM CLAIMS.
(a) Establishment of Standards.--Not later than 1 year
after the date of the enactment of this Act, the Secretary
shall establish standards for the form and submission of
claims for payment under the medicare program under title
XVIII of the Social Security Act (42 U.S.C. 1395 et seq.) and
the medicaid program under title XIX of such Act (42 U.S.C.
1396 et seq.).
(b) Ensuring Provider Responsibility.--In establishing
standards under subsection (a), the Secretary, in
consultation with appropriate agencies including the
Department of Justice, shall include such methods of ensuring
provider responsibility and accountability for claims
submitted as necessary to control fraud and abuse.
(c) Use of Electronic Media.--The Secretary shall develop
specific standards which govern the submission of claims
through electronic media in order to control fraud and abuse
in the submission of such claims.
SEC. 703. UNIQUE PROVIDER IDENTIFICATION CODE.
(a) Establishment of System.--Not later than 1 year after
the date of the enactment of this Act, the Secretary shall
establish a system which provides for the issuance of a
unique identifier code for each individual or entity
furnishing items or services for which payment may be made
under title XVIII or XIX of the Social Security (42 U.S.C.
1395 et seq.; 1396 et seq.), and the notation of such unique
identifier codes on all claims for payment.
(b) Application Fee.--The Secretary shall require an
individual applying for a unique identifier code under
subsection (a) to submit a fee in an amount determined by the
Secretary to be sufficient to cover the cost of investigating
the information on the application and the individual's
suitability for receiving such a code.
SEC. 704. USE OF NEW PROCEDURES.
No payment may be made under either title XVIII or XIX of
the Social Security Act (42 U.S.C. 1395 et seq.; 42 U.S.C.
1396 et seq.) for any item or service furnished by an
individual or entity unless the requirements of sections 702
and 703 are satisfied.
SEC. 705. NONDISCHARGEABILITY OF CERTAIN MEDICARE DEBTS.
(a) Payment to Providers.--Section 1815(d) (42 U.S.C.
1395g(d)) is amended by adding at the end thereof the
following new sentence: ``Notwithstanding any other provision
of law, amounts due to the program under this subsection are
not dischargeable under any provision of title 11, United
States Code.''.
(b) Payment of Benefits.--Section 1833(j) (42 U.S.C.
1395l(j)) is amended by adding at the end thereof the
following new sentence: ``Notwithstanding any other provision
of law, amounts due to the program under this subsection are
not dischargeable under any provision of title 11, United
States Code.''.
____
S. 1859
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 ``Medicare Restore Trust Act
of 1996''.
SEC. 2. PROHIBITION ON CONSIDERATION OF LEGISLATION THAT
DIVERTS SAVINGS ACHIEVED THROUGH MEDICARE
WASTE, FRAUD, AND ABUSE ENFORCEMENT ACTIVITIES
FOR PURPOSES OTHER THAN IMPROVING THE SOLVENCY
OF THE FEDERAL HOSPITAL INSURANCE TRUST FUND.
(a) Point of Order.--It shall not be in order in the Senate
to consider any bill, conference report, or any other
legislation that would use savings achieved through
enforcement activities that are intended to combat waste,
fraud, and abuse under the medicare program under title XVIII
of the Social Security Act as offsets for purposes other than
to improve the solvency of the Federal Hospital Insurance
Trust Fund established under section 1817 of such Act (42
U.S.C. 1395i) (in this Act referred to as the ``trust
fund'').
(b) Waiver.--The point of order described in subsection (a)
may be waived or suspended in the Senate by a \3/5\ majority
vote of the Senators duly chosen and sworn, or by the
unanimous consent of the Senate.
(c) Appeals.--
(1) In general.--Appeals in the Senate from decisions of
the Chair relating to this section shall be limited to 1
hour, to be equally divided between and controlled by, the
appellant and the manager of the bill, conference report, or
other legislation, as the case may be.
(2) Waiver.--An affirmative \3/5\ majority vote of the
Senators duly chosen and sworn, or a unanimous consent
agreement of the Senate shall be required to sustain an
appeal of the ruling of the Chair on a point of order raised
under this section.
SEC. 3. ENSURING THE INTEGRITY OF THE FEDERAL HOSPITAL
INSURANCE TRUST FUND.
(a) Determination.--Prior to the end of each fiscal year,
the Secretary of Health and Human Services (in this section
referred to as the ``Secretary'') and the Attorney General
shall jointly determine--
(1) the portion of the costs charged during such fiscal
year to any account established within the Federal Hospital
Insurance Trust Fund under title XVIII of the Social Security
Act (42 U.S.C. 1395 et seq.) to combat health care waste,
fraud, and abuse, which do not relate to the administration
of the medicare program; and
(2) the amount of funds deposited into such account of such
trust fund during such fiscal year that were attributable to
enforcement activities that were intended to combat health
care waste, fraud, and abuse, which do not relate to the
administration of the medicare program.
(b) Certification.--If the portion determined under
paragraph (1) of subsection (a) exceeds the amount determined
under paragraph (2) of such subsection, the Secretary and the
Attorney General shall certify to the Secretary of the
Treasury the amount, which shall be equal to the amount of
such excess, which should be transferred from the General
Fund of the Treasury to such trust fund, in order to ensure
that such trust fund is fully reimbursed for any expenditures
made from the account described in subsection (a) that are
not related to the administration of the medicare program
under title XVIII of the Social Security Act.
(c) Transfer of Funds.--The Secretary of the Treasury shall
transfer to such trust fund from the General Fund of the
Treasury, out of any funds in the General Fund that are not
otherwise appropriated, an amount equal to the amount
certified under subsection (b).
______
By Mr. McCONNELL (for himself, Mr. Dole, Mr. Lieberman, and Mr.
Moynihan):
S. 1860. A bill to provide for legal reform and consumer compensation
relating to motor vehicle tort systems, and for other purposes; to the
Committee on Commerce, Science, and Transportation.
the auto choice reform act of 1996
______
By Mr. McCONNELL (for himself and Mr. Dole):
S. 1861. A bill to provide for legal reform and consumer
compensation, and for other purposes; to the Committee on the
Judiciary.
the legal reform and consumer compensation act of 1996
Mr. McCONNELL. Mr. President, several weeks ago, I was
disappointed, but not surprised, when the President vetoed the
bipartisan product liability reform bill. The bill would have curbed
runaway punitive damage awards--which the Supreme Court endorsed in its
recent BMW versus Gore decision--and offered some protection to those
needlessly dragged into lawsuits. The President, erroneously, in my
view, charged that the product liability reform bill, offered too many
benefits to business and unfairly burdened the injured.
The President missed an opportunity to correct some of the defects in
the legal system. The fact is the system is too costly and fails to
provide prompt and fair relief to those who are injured. Less than half
of every dollar spent on lawsuits goes to the injured.
And, spiraling legal costs exact a toll on every American family and
business owner in the form of higher insurance premiums and ever-
increasing costs for medical care. FBI Director Louis Freeh estimates
that fraudulent medical claims arising out of phony car accidents cost
every American household $200 a year.
Moreover, economic growth is impeded when new American-made products,
technology, medicines, and medical devices aren't brought to worldwide
markets because of too many lawsuits.
This mess-of-a-legal system can be turned around with reforms that
will ensure those who are injured get fairly and quickly compensated
without resort to expensive and protracted litigation. The two bills I
am introducing today take aim at the unnecessary costs of personal
injury lawsuits. The result will be more money in the hands of the
injured more quickly, and a massive savings to American consumers.
The Joint Economic Committee estimates that the Auto Choice Reform
Act will save the driving public $40 billion annually in insurance
costs. Savings would be progressive, resulting in savings to low-income
drivers of about 45 percent on their insurance premiums.
[[Page S6097]]
The Legal Reform and Consumer Compensation Act, designed to change
the monopolistic and anticompetitive contingent fee system and to
provide a rapid recovery mechanism for personal injury victims, would
save more than $45 billion a year.
These dramatic savings are achieved without capping punitive damages,
or limiting the rights of victims. Rather, these bills expand consumer
options. By adding a new type of auto insurance, new ways of paying
victims fairly for their injuries, and breaking the contingent fee
hold, Americans will be begin to be relieved of the litigation burden
that threatens to strangle every family and burdens the overall
economy.
The changes proposed in these bills will require a major rethinking
about the current zero-sum, adversarial legal system. Occasionally, the
legal system rewards a persistent plaintiff with a windfall damage
award--like the woman who won a multi-million-dollar verdict from
McDonald's for spilling hot coffee on herself. But odds of winning in
the legal system are about as good as hitting a jackpot in Las Vegas.
The perverse incentive structure--the one-in-a-million chance of
winning the lottery--discourages settlement and rewards a piling on of
claims. If a jury will award an injured party 3 times his or her out-
of-pocket losses, then 10 trips to the doctor are better than 2. The
Rand Corp., in a study released earlier this year, estimates that
excess medical claiming connected with lawsuits consumed some $4
billion of health care resources.
But the fault for the runaway legal system does not lie exclusively
with the injured and their lawyers. Defendants and their lawyers know
that the multimillion-dollar jury award is a rare occurrence. Yet, most
cases are fought as if every case results in $1 million verdict. Every
dollar spent on defense buys delay and precludes early and reasonable
resolution.
In the meantime, every American pays the price--through higher car
insurance premiums, spiraling medical bills, and soaring prices at the
checkout counter. And the economy suffers from slow growth and through
products, inventions, and technologies withheld from the world's
markets because of the cost of lawsuits. It's time we cut the tort tax
and give every American relief from the costly legal system.
I am pleased that Senator Dole is joining this effort. His
sponsorship of this ambitious effort to overhaul the legal system will
probably be one of his last legislative initiatives. I am honored to
have his support.
I ask unanimous consent that a copy of the two bills and a summary of
the bills be printed in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:
S.1860
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 ``Auto Choice Reform Act of
1996''.
SEC. 2. FINDINGS.
The Congress finds that--
(1) the costs of operating a motor vehicle are excessive
due to the legal and administrative costs associated with the
processing of claims under the tort system;
(2) the costly fault and liability insurance system often
fails to provide compensation commensurate with loss, takes
too long to pay benefits and wastes too many dollars on legal
fees;
(3) the distorted incentives of the tort system for motor
vehicles produce--
(A) significant fraud in the claiming process, thereby
dangerously exacerbating the national distrust felt by many
Americans toward the legal process in general and the rule of
law itself;
(B) significant wasteful, fraudulent, and costly overuse
and abuse of scarce health care resources and services,
thereby increasing the problems of affordability and
accessibility in the health care system;
(C) significant and unbearable cost burdens on low-income
Americans, which impose on them the Hobson's choice of
driving on an unlawful, uninsured basis or compelling them to
forego essential needs;
(D) significant reductions in access to, and purchases of,
motor vehicles, thereby damaging the economic well-being of
many low-income Americans, while also unnecessarily harming a
critical component of the American economy;
(E) significant deterioration of the economic well-being of
most major American cities through the imposition of a
massive, differentially greater ``tort tax'' on urban
residents, thereby contributing to the abandonment of cities
by many American taxpayers able to achieve substantial after-
tax savings on automobile insurance premiums by the sole act
of moving to adjacent suburban communities; and
(F) significant inability to achieve market-based discounts
in insurance rates for owners of safer cars, thereby
powerfully contributing to the lesser safety of American
drivers and passengers;
(4) a system that allows consumers the opportunity to self-
insure and separates economic and non-economic damages for
the purpose of purchasing insurance would provide enormous
cost savings to drivers;
(5) consumer choice in selection of motor vehicle insurance
would be greatly enhanced if each consumer could decide upon
the form of insurance that best suits the individual needs of
the consumer;
(6) insurance to indemnify individuals for personal injury
arising from motor vehicle collisions is frequently
unavailable at reasonable cost because of the potential for
third-party claims;
(7) a system enabling individuals to select the form of
motor vehicle insurance coverage that best suits individual
needs would enhance individual freedom and reduce the costs
of motor vehicle insurance for consumers; and
(8) a system which targets and emphasizes the scourge of
those who drive under the influence of drugs or alcohol will
further deter such dangerous and unlawful conduct.
SEC. 3. PURPOSE.
The purpose of this Act is to authorize consumers of motor
vehicle insurance to choose between their present tort
remedies under State law and a system which combines first-
party insurance and the right to sue negligent drivers for
all further uncompensated economic losses.
SEC. 4. DEFINITIONS.
For the purposes of this Act, the term--
(1) ``accident'' means unforeseen or unplanned event
causing loss or injury;
(2) ``economic loss'' means any objectively verifiable
pecuniary loss resulting from the harm suffered, including
past and future medical expenses, loss of past and future
earnings, burial costs, costs of repair, or replacement costs
of replacement services in the home, including child care,
transportation, food preparation, and household care, costs
of making reasonable accommodations to a personal residence,
loss of employment, and loss of business or employment
opportunities, to the extent recovery for such losses is
allowed under applicable State law;
(3) ``financial responsibility law'' means a statute
(including one requiring compulsory coverage) penalizing
motorists for failing to carry defined limits of tort
liability insurance covering motor vehicle accidents;
(4) ``insurer'' includes a person who is self-insured
within the meaning of applicable State law;
(5) ``intentional misconduct'' means conduct whereby harm
is intentionally caused or attempted to be caused by one who
acts or fails to act for the purpose of causing harm or with
knowledge that harm is substantially certain to follow when
such conduct caused or substantially contributed to the harm
claimed for, except a person does not intentionally cause or
attempt to cause harm--
(A) merely because his or her act or failure to act is done
with the realization that it creates a grave risk of causing
harm; or
(B) if the act or omission causing bodily harm is for the
purpose of averting bodily harm to oneself or another person;
(6) ``motor vehicle'' means a vehicle of any kind required
to be registered under the provisions of the applicable State
law relating to motor vehicles;
(7) ``net economic loss''--
(A) means economic loss, including when payable based on
fault, a reasonable attorney's fee calculated on the basis of
the value of the attorney's efforts as reflected in payment
to the attorney's client; and
(B) excludes amounts paid or payable under--
(i) Federal, State, or private disability or sickness
programs;
(ii) Federal, State, or private health insurance programs;
(iii) employer wage continuation programs;
(iv) workers' compensation or similar occupational
compensation acts; and
(v) any other source of payment intended to compensate such
individual for injuries resulting from a motor vehicle
accident, including amounts paid under personal protection
insurance or tort maintenance coverage;
(8) ``no-fault motor vehicle law'' means a statute under
which those injured in motor vehicle accidents are paid
without regard to fault for their pecuniary losses as a
result of personal injury, in return for which claims based
on fault including for nonpecuniary losses, are to a defined
extent limited;
(9) ``noneconomic loss'' means subjective, nonmonetary
losses including pain, suffering, inconvenience, mental
suffering, emotion distress, loss of society and
companionship, loss of consortium, hedonic damages, injury to
reputation, and humiliation;
(10) ``person'' means any individual, corporation, company,
association, firm, partnership, society, joint stock company,
or any other entity (including any governmental entity);
(11) ``personal protection'' means an insurance contract
payable without regard to
[[Page S6098]]
fault for net economic loss due to personal injury resulting
from a motor vehicle accident, along with waiver of tort
claims pursuant to this Act;
(12) ``replacement service loss'' means expenses reasonably
incurred in obtaining ordinary and necessary services from
others, not members of the injured person's household, in
lieu of the services the injured person would have performed
for the benefit of the household;
(13) ``resident relative or dependent'' means a person
related to the owner of a motor vehicle by blood, marriage,
adoption, or otherwise (including a dependent receiving
financial services or support from such owner), and residing
in the same household at the time of accidental personal
injury, and a person resides in the same household if he or
she usually makes his or her home in the same family unit,
even though temporarily living elsewhere;
(14) ``serious bodily injury'' means bodily injury which
results in death, dismemberment, significant and permanent
loss of an important bodily function, or significant and
permanent scarring or disfigurement;
(15) ``State'' means any State of the United States, the
District of Columbia, the Commonwealth of Puerto Rico, Guam,
the Virgin Islands, American Samoa, the Northern Mariana
Islands, the Trust Territories of the Pacific Islands, and
any other territory or possession of the United States;
(16) ``tort liability'' means the legal obligation for
payment of damages caused by one adjudged to have committed a
tort;
(17) ``tort liability insurance'' means insurance by the
terms of which an insurer agrees to pay, on behalf of an
insured, damages the latter is obligated to pay a third
person because of his or her liability to that third person;
(18) ``tort maintenance coverage'' means coverage under
which a tort liability insured, when involved in an accident
with a personal protection insured, retains his or her right
to claim for personal injury under State law without
modification by any provision of this Act, except that
responsibility for payment for any such claim is assumed by
his or her own insurer to the extent of such coverage under
section 5(b)(1); and
(19) ``uninsured motorist'' means the owner of a motor
vehicle, including his or her resident relatives, uninsured
for either personal protection or tort liability insurance at
the limits prescribed by the applicable State's financial
responsibility law or higher under section 5(a)(2)(A).
SEC. 5. MOTOR VEHICLE PERSONAL PROTECTION INSURANCE.
(a) Insurance Policy Provisions.--(1) An insurance policy
that includes provisions that entitle the insured to receive,
without regard to fault or lack of fault, the insured's net
economic losses caused by an injury along with an express,
specific waiver of tort rights as provided in the insurance
policy shall be valid notwithstanding any contrary provisions
of State law.
(2) In order for a personal protection insurance policy to
be covered by this Act, a motor vehicle insurance policy
issued by an insurer shall, at a minimum--
(A) provide personal protection coverage of the greater
of--
(i) up to the minimum limits of liability insurance for
personal injury under the State's financial responsibility
law; or
(ii) in a State covered by a no-fault motor vehicle
insurance law, up to the minimum level of insurance required
for no-fault benefits; and
(B) contain provisions under the State's financial
responsibility law, including those related to liability for
property damage, except to the extent State law would bar
contractual provisions giving effect to personal protection
authorizations set forth in this Act, or to the extent that
State law would be contrary to other provisions of this Act.
(3) A personal protection insurer is authorized to contract
to pay personal protection benefits periodically as losses
accrue. Unless the treatment or expenses related thereto are
in reasonable dispute, an insurer who does not pay a claim
for net economic loss covered by a personal protection
insurance under this Act within 30 days after payment is due,
shall pay the loss compounded at a rate of 50 percent per
annum, as liquidated damages and in lieu of any penalty or
exemplary damages.
(b) Operation of the Right To Choose.--(1) Under this Act,
in lieu of buying traditional tort liability insurance for
personal injury to protect third parties, motorists have the
right to choose personal protection which will be available
to themselves and their family members in the event of a
motor vehicle accident, including the amount of financial
protection they deem appropriate and affordable for
themselves and such others. As an alternative, motorists have
the right to elect traditional tort liability coverage for
personal injury at the minimum limits (or higher) under the
State's financial responsibility law.
(2)(A) A motorist who chooses traditional tort liability
has automatically included in such coverage tort maintenance
coverage at least at the equivalent of the minimum levels of
insurance under the higher of--
(i) the State's financial responsibility law for personal
injury; or
(ii) the State's no-fault motor vehicle law, if applicable.
(B) A motorist described under subparagraph (A) who is
involved in an accident with another motorist remains subject
to tort law for personal injury except that, based on fault,
such motorist--
(i) may be claimed against by those covered by personal
protection insurance or tort maintenance coverage only for
net economic loss; and
(ii) may not claim against those covered by personal
protection insurance or tort maintenance coverage except for
net economic loss.
(C)(i) With respect to a claim under subparagraph (B)(ii),
a deduction is made against the recovery equal to the limits
of tort maintenance coverage applicable to the economic loss
of the claimant.
(ii) One-half of any amount paid under tort maintenance
coverage referred to under clause (i) shall be deemed payable
for economic loss.
(3) A motorist who chooses personal protection coverage and
who is involved in an accident with another such motorist is
compensated under his or her own policy for net economic loss
only without regard to fault. But if the motorist sustains
net economic loss in excess of his or her policy's benefit
levels, that person retains the right to claim and sue for
net economic loss based on fault.
(4) If a motorist who has chosen personal protection
coverage is involved in an accident with an uninsured
motorist, the personal protection insured is compensated for
net economic loss without regard to fault according to the
terms of his or her personal protection policy, and has the
right to claim against the uninsured motorist for net
economic loss based on fault. The uninsured motorist forfeits
the right to claim for noneconomic loss against the motorist
who has chosen the personal protection policy.
(5)(A) A motorist who chooses either personal protection
insurance or tort liability insurance also binds by such
choice his or her resident relatives, provided that--
(i) an adult resident relative shall not be bound without
his or her consent, which, in the absence of express consent,
shall be implied when the relative is present in a motor
vehicle operated by the motorist; and
(ii) insurers are authorized to specify reasonable terms
and conditions governing the commencement, duration, and
application of the chosen coverage depending on the number of
motor vehicles and owners thereof in a household.
(B) In order to minimize conflict between the two options
under subparagraph (A), insurers are authorized to maintain
underwriting rules that encourage uniformity within a
household.
(6) A personal protection insured retains the right to
claim, and remains subject to a claim, for driving under the
influence of alcohol or illegal drugs, both as defined by
State law, or for intentional misconduct.
(7) A personal protection insured claims personal
protection benefits in the following priority:
(A) The personal protection of an employer if the person
injured is an employee of the employer and the accident
occurs while the employee is acting within the scope of the
employee's employment.
(B) The personal protection under which the injured person
is or was an insured.
(C) The personal protection covering a motor vehicle
involved in the accident, if the person injured was an
occupant or was struck by such motor vehicle at the time of
the accident.
(8) A personal protection insurer is authorized to write
personal protection coverage--
(A) without any deductible or subject to a reasonable
deductible not to exceed $1,000; and
(B) with an exclusion of coverage for persons driving under
the influence of alcohol or illegal drugs.
(9) A personal protection insurer is subrogated, to the
extent of its obligations, to all of the rights of its
personal protection insured with respect to an accident
caused in whole or in part, as determined by applicable State
law, by the negligence of an uninsured motorist or driving
under the influence of alcohol or illegal drugs, or caused in
whole or in part by intentional misconduct or any person who
is not affected by the limitations on tort rights and
liabilities under this Act.
(10) Any person lawfully uninsured under the terms of State
law for either personal protection or tort liability
insurance retains his or her tort rights in a form unaffected
by this Act.
(c) Renewal or Cancellation.--An insurer shall not cancel,
fail to renew, or increase the premium of its insured solely
on account of the insured or any other injured person making
a claim for personal protection benefits or, where there is
no basis for ascribing fault to the insured or one for whom
the insured is vicariously liable, for tort maintenance
coverage.
(d) Immunity.--No insurer or any agent or employee of such
insurer, no insurance producer representing a motor vehicle
insurer or any automobile residual market plan, and no
attorney licensed to practice law within this State shall be
liable in an action for damages on account of an election of
the tort liability option, an election of the personal
protection option, or a failure to make a required election,
unless such person has willfully misrepresented the available
choices or has fraudulently induced the election of one
system over the other.
(e) Rule of Construction.--Nothing in this Act shall be
construed--
(1) to waive or affect any defense of sovereign immunity
asserted by any State under any law or by the United States;
(2) to preempt State choice-of-law rules with respect to
claims brought by a foreign nation or a citizen of a foreign
nation;
[[Page S6099]]
(3) to affect the right of any court to transfer venue, to
apply the law of a foreign nation, or to dismiss a claim of a
foreign nation or of a citizen of a foreign nation on the
ground of inconvenient forum;
(4) subject to paragraph (1), to create or vest
jurisdiction in the district courts of the United States over
any motor vehicle accident liability or damages action
subject to this Act which is not otherwise properly in the
United States District Court;
(5) to prevent insurers and insureds from contracting to
limit recovery for lost wages and income under personal
protection coverage such that only 60 percent or more of lost
wages or income is covered, or to offset death benefits under
personal protection coverage by amounts paid for lost wages
and replacement service losses;
(6) to prevent an insurer from contracting with personal
protection insureds, as permitted by State law, to have
submitted to arbitration any dispute with respect to payment
of personal protection benefits;
(7) to relieve a motorist of the obligations imposed by
State law to purchase tort liability insurance for personal
injury to protect third parties who are not affected by the
immunities of subsection (b); and
(8) to preclude a State from enacting, for all motor
vehicle accident cases including cases covered by this Act, a
minimum dollar value for defined classes of cases involving
death or serious bodily injury.
SEC. 6. APPLICABILITY TO STATES; CHOICE OF LAW; JURISDICTION;
AND CONSTRUCTION.
(a) Election of Nonapplicability by States.--This Act shall
not apply in a State if such State enacts a statute that--
(1) cites the authority of this subsection; and
(2) declares the election of such State that this Act shall
not apply.
(b) Nonapplicability to State by State Finding.--(1) This
Act shall not apply in a State, if--
(A) the State official charged with jurisdiction over
insurance rates for motor vehicles makes a finding that the
statewide average motor vehicle premiums in effect
immediately before the effective date of this Act for
personal injury will not be reduced by an average of at least
30 percent for persons choosing personal protection coverage
in lieu of traditional tort liability pursuant to this Act
(without including any cost for uninsured or underinsured or
medical payments coverages);
(B) the finding described under subparagraph (A) is
supported by evidence adduced in public hearing and
reviewable under the State's administrative procedure law;
and
(C) the finding described under subparagraph (A) and any
review of such finding described under subparagraph (B)
occurs no later than 60 days after the date of the enactment
of this Act.
(2) Premiums for personal injury referred to under
paragraph (1)(A) include premiums for--
(A) personal injury liability, uninsured and underinsured
motorists' liability, and medical payments coverage; and
(B) if applicable--
(i) no fault benefits under no fault motor vehicle law; or
(ii) similar benefits under a law not limiting claims based
on fault for nonpecuniary losses.
(c) Choice of Law.--In disputes between citizens of States
that elect nonapplicability under subsection (a) and citizens
of States that do not so elect, ordinary choice of law
principles shall apply.
(d) Jurisdiction.--This section shall not confer
jurisdiction on the district courts of the United States
under section 1331 or 1337 or title 28, United States Code.
(e) Construction.--Nothing in this Act shall alter or
diminish the authority or obligation of the Federal courts to
construe the terms of this Act.
SEC. 7. EFFECTIVE DATE.
This Act shall take effect 60 days after the date of the
enactment of this Act.
____
S. 1861
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 ``Legal Reform and Consumer
Compensation Act of 1996''.
SEC. 2. TABLE OF CONTENTS.
The table of contents for this Act is as follows:
Sec. 1. Short title.
Sec. 2. Table of contents.
Sec. 3. Findings.
TITLE I--EARLY OFFER AND RAPID RECOVERY
Sec. 101. Early offer and rapid recovery mechanisms.
TITLE II--FAIRNESS IN LEGAL FEES
Sec. 201. Findings and purpose.
Sec. 202. Definitions.
Sec. 203. Creation of a fiduciary relationship.
Sec. 204. Written hourly rate fee agreement.
Sec. 205. Nature of demand for compensation.
Sec. 206. Time limit for, and requisite contents of, response setting
forth settlement offer.
Sec. 207. Consequences of failure to include prescribed material with
settlement offer.
Sec. 208. No obligation to issue response; inadmissibility of demands,
responses, and failure to respond.
Sec. 209. Effect of pre-demand settlement offer.
Sec. 210. Pre-retention offer.
Sec. 211. Post-retention offer when a pre-retention offer has been
made.
Sec. 212. Post-retention offer when no pre-retention offer has been
made.
Sec. 213. Calculation of attorney's fee when there is a subsequent
resolution of the claim.
Sec. 214. Provision of closing statement.
Sec. 215. Effect of contravening agreements.
Sec. 216. Inapplicability.
TITLE III--APPLICABILITY AND RULE OF CONSTRUCTION
Sec. 301. Applicability to States; choice of law; jurisdiction; and
construction.
Sec. 302. Effective date.
SEC. 3. FINDINGS.
The Congress finds that--
(1) the current liability system is, all too often, a
frustrating experience for many personal injury claimants,
resulting in a time-consuming process which provides
inadequate compensation for their injuries;
(2) for other personal injury claimants, the system can
provide a windfall of financial gain, greatly in excess of
their actual losses;
(3) the unpredictable and erratic system is a product of a
perverse incentive structure in which the magnitude of
noneconomic damages is directly linked to, and is a multiple
of, the out-of-pocket expenses incurred by the claimant;
(4) the incentives of the litigation system perpetuate the
overuse and abuse of the medical system, costing the economy
billions of dollars and costing every United States family
hundreds of dollars in unnecessary insurance premiums and
health care expenses;
(5) the system as it has recently developed--
(A) is highly regressive;
(B) is often duplicative of and inconsistent with Federal
regulatory and social welfare programs for the protection of
injured parties;
(C) is burdened by an administrative cost structure that
causes a disproportionate amount of its dollars to go to
lawyers rather than to injured parties;
(D) is particularly prejudicial to the competitive position
of the American small business community;
(E) is a major and increasing threat to the economic
viability of American cities;
(F) imposes a major burden on the American economy and if
reformed would significantly enhance American productivity
and consumer wealth;
(G) is replete with incentives that reward abusive claiming
and defensive behavior; and
(H) is therefore a major cause of the dangerous disesteem
increasingly felt by increasing numbers of Americans toward
the legal system and, indeed, the rule of law itself; and
(6) there is a need for a system of early offer, rapid
recovery and consumer choice to enable claimants to be made
whole and recover all economic losses without resort to
complex and protracted litigation.
TITLE I--EARLY OFFER AND RAPID RECOVERY
SEC. 101. EARLY OFFER AND RAPID RECOVERY MECHANISMS.
(a) Purpose.--The purpose of this title is to establish a
system of early offer and rapid recovery to permit personal
injury claimants to recover their economic losses from a
responsible party in a timely manner.
(b) In General.--Chapter 111 of title 28, United States
Code, is amended by adding at the end the following new
section:
``Sec. 1660. Early offer and rapid recovery mechanisms
``(a) For purposes of this section:
``(1) The term `allegedly responsible party' means a
person, partnership, or corporation, and an insurer thereof,
alleged by the claimant to be responsible for at least some
portion of an injury alleged by a claimant.
``(2) The term `claimant' means an individual who, in his
or her own right, or vicariously as otherwise permitted by
law, is seeking compensation for personal injury.
``(3) The term `clear and convincing evidence' means that
measure or degree of proof that will produce in the mind of
the trier of fact a firm belief or conviction as to the truth
of the allegations sought to be established. The level of
proof required to satisfy such standard shall be more than
that required under preponderance of the evidence, and less
than that required for proof beyond a reasonable doubt.
``(4) The term `collateral benefits' means all benefits and
advantages received or entitled to be received (regardless of
the right of recoupment of any other entity, through
subrogation, trust agreement, lien, or otherwise) by an
injured individual (or other entity) as reimbursement of loss
because of personal injury--
``(A) payable or required to be paid by--
``(i) Federal, State, or other governmental disability,
unemployment, or sickness programs;
``(ii) under the terms of any Federal, State, or other
governmental or private health insurance, accident insurance,
wage or salary continuation plan, or disability income
insurance; or
``(iii) any other program or compensation system, if the
payment is intended to compensate the claimant for the same
injury or disability which is the subject of the claim; minus
[[Page S6100]]
``(B) the amount paid by such individual (or by the spouse,
parent, child, or legal guardian of such individual) to
secure the payments described in subparagraph (A).
``(5) The term `economic loss' means any objectively
verifiable pecuniary loss resulting from the harm suffered,
including past and future medical expenses, loss of past and
future earnings, burial costs, property damage accompanying
bodily injury, costs of replacement services in the home,
including child care, transportation, food preparation, and
household care, costs of making reasonable accommodations to
a personal residence, loss of employment, and loss of
business or employment opportunities, to the extent recovery
for such losses is allowed under applicable State law.
``(6) The term `entity' includes an individual or person.
``(7) The term `intentional misconduct' means conduct
whereby harm is intentionally caused or attempted to be
caused by one who acts or fails to act for the purpose of
causing harm or with knowledge that harm is substantially
certain to follow when such conduct caused or substantially
contributed to the harm claimed for, except a person does not
intentionally cause or attempt to cause harm--
``(A) merely because his or her act or failure to act is
intentional or done with the realization that it creates a
risk of harm; or
``(B) if the act or omission causing bodily harm is for the
purpose of averting bodily harm to oneself or another person.
``(8) The term `liability claim' means a demand for
compensation by certified mail to an allegedly responsible
party, which shall set forth the material facts relevant to
the claim including--
``(A) the name, address, age, marital status, and
occupation of claimant, which term for the purposes of this
section includes the injured party if claimant is operating
in a representative capacity;
``(B) a brief description of how the injury occurred;
``(C) the names, and, if known, the addresses, telephone
numbers, and occupations of all known witnesses to the
injury;
``(D) copies of photographs in claimant's possession that
relate to the injury;
``(E) the basis for claiming that the party to whom the
claim is addressed is at least partially responsible for
causing the injury;
``(F) a description of the nature of the injury, the names
and addresses of all physicians, other health care providers,
and hospitals, clinics, or other medical service entities
that provided medical care to the claimant or the injured
party including the date and nature of the service;
``(G) a copy of the medical records relating to the injury
and those involving a prior injury or preexisting medical
condition which an allegedly responsible party would be able
to introduce into evidence in a trial or, in lieu of either
or both, executed releases authorizing the allegedly
responsible party to obtain such records directly from health
care providers that produced or possess them; and
``(H) relevant documents, including records of earnings if
a claimant is self-employed and employer records of earnings
if a claimant is employed, and any medical expenses, wages
lost, or other pertinent damages suffered as a consequence of
the injury.
``(9) The term `noneconomic loss' means nonmonetary losses
including punitive damage claims and further including
without being limited to pain, suffering, inconvenience,
mental suffering, emotional distress, loss of society and
companionship, loss of consortium, hedonic damages, injury to
reputation, and humiliation.
``(10) The term `punitive damages' means damages awarded
against any person or entity to punish such persons or entity
or to deter such person or entity, or others, from engaging
in similar behavior in the future.
``(11) The term `reasonable attorney's fee' means an hourly
fee for services rendered subsequent to the execution of a
written agreement establishing an attorney-client
relationship that bears a reasonable relation to the
attorney's actual efforts on the client's behalf. Fees shall
not be deemed reasonable to the extent that services provided
by an attorney are attributable to any failure to provide
reasonably prompt notice pursuant to subsection
(b)(1)(A)(ii).
``(12) The term `serious bodily injury' means bodily injury
which results in death, dismemberment, significant and
permanent loss of an important bodily function, or
significant and permanent scarring or disfigurement.
``(13) The term `wanton misconduct' means conduct that the
allegedly responsible party realized was excessively
dangerous, done heedlessly and recklessly, and with a
conscious disregard of the consequences to or rights and
safety of the claimant.
``(b)(1)(A) After an occurrence that may give rise to a
civil action or claim against any person, in any Federal or
State court based on any cause of action to recover damages
for personal injury, any potentially allegedly responsible
party has the option to offer, not later than the later of--
``(i) 120 days after the injury; or
``(ii) 120 days after the initiation of the liability
claim,
to compensate a claimant for reasonable economic loss,
including future economic loss, less collateral benefits, and
including a reasonable attorney's fee for the claimant.
``(B) If within 30 days of receipt of a liability claim an
allegedly responsible party notifies an unrepresented
claimant or a claimant's attorney of a request for a medical
examination of the claimant, and the claimant is not made
available for such examination within 10 days of receipt of
the request, the time provided by this section for issuing a
response is extended by 1 day for each day that the request
is not honored after the expiration of 10 days from the date
of the request. Any such extension shall also include a
further period of 10 days from the date of the completion of
the medical examination.
``(C) The claimant may extend the time for receiving the
offer specified in subparagraph (A).
``(2) States may establish for all cases, including cases
covered by this title, a minimum dollar value for defined
classes involving death or serious bodily injury. A claimant
shall have the option of accepting such minimum dollar value
payable in lump sum, or accepting the benefit specified in
paragraph (1)(A).
``(c) An offer under subsection (b) may include other
allegedly responsible parties, individuals, or entities that
were involved in the events which gave rise to the civil
action, regardless of the theory of liability on which the
claim is based, upon their request or consent.
``(d) Future economic losses shall be payable to an
individual under this section as such losses occur.
``(e) If, after an offer is made under subsection (b), the
participants in the offer dispute their relative
contributions to the payments to be made to the individual,
such disputes shall be resolved through binding arbitration
in accordance with applicable rules and procedures
established by the Attorney General of the United States.
``(f)(1) The claimant may reject an offer of compensation
made under subsection (b) and elect to bring or maintain a
civil action. Upon rejection of the offer, the claimant may
recover economic loss, including future economic loss, less
collateral benefits. The amount of collateral benefits shall
be determined by the court in a pretrial proceeding. In any
subsequent proceeding in the action, no evidence shall be
admitted as to the amount of economic loss for which
collateral benefits have been paid to, or will be paid to,
the claimant. The claimant may recover for noneconomic loss
to the extent authorized by other applicable law only if the
claimant proves each element of the claim for noneconomic
loss by clear and convincing evidence, that the allegedly
responsible party caused the injury by intentional or wanton
misconduct.
``(2) A notice of such a rejection is required to be made
not later than 90 days after the date on which the offer of
compensation benefits is made. A failure to accept the offer
within the 90-day period is deemed a rejection.
``(g) Rejected offers may not be disclosed in any
subsequent action brought by the claimant.
``(h) Nothing in this section shall be construed to--
``(1) waive or affect any defense of sovereign immunity
asserted by any State under any law;
``(2) waive or affect any defense of sovereign immunity
asserted by the United States;
``(3) affect the applicability of any provision of chapter
97;
``(4) preempt State choice-of-law rules with respect to
claims brought by a foreign nation or a citizen of a foreign
nation;
``(5) affect the right of any court to transfer venue or to
apply the law of a foreign nation or to dismiss a claim of a
foreign nation or of a citizen of a foreign nation on the
ground of inconvenient forum;
``(6) affect any applicable statute of limitations of any
State or of the United States, except as expressly provided
in this title; or
``(7) impair any right of a provider of collateral benefits
to seek reimbursement outside of the claimant's cause of
action where permitted by State law, other than by a lien on
the recovery of the claimant.
``(i)(1) This section shall not apply to accidental bodily
injury caused by the operation or the use of a motor vehicle
in claims in which an uninsured motorist or a personal
protection insured is involved.
``(2) For purposes of this subsection the term `operation
or use'--
``(A) means operation or use of a motor vehicle as a motor
vehicle, including, incident to its operation or use as a
vehicle, the occupation of the vehicle;
``(B) does not cover conduct within the course of a
business of manufacturing, selling, or maintaining a motor
vehicle, including repairing, servicing, washing, loading, or
unloading; and
``(C) does not include such conduct not within the course
of such a business unless such conduct occurs while occupying
a motor vehicle.''.
(c) Technical and Conforming Amendments.--The table of
sections for chapter 111 of title 28, United States Code, is
amended by adding at the end the following new item:
``1660. Early offer and rapid recovery mechanisms.''.
TITLE II--FAIRNESS IN LEGAL FEES
SEC. 201. FINDINGS AND PURPOSE.
(a) Findings.--The Congress finds that contingency fees
play a useful and often critical role in ensuring access to
counsel and the courts on the part of those who would
otherwise be unable to afford such access, but that--
(1) personal injury claimants are often subjected to
unnecessary costs, delays, and inefficiencies in processing
their compensation claims;
[[Page S6101]]
(2) virtually all such claimants who are represented by
attorneys are charged contingent fees;
(3) the ethical and legal validity of a contingent fee is
dependent upon an attorney undertaking risk in exchange for
sharing proportionately in the proceeds of a claim;
(4) the perverse incentives of the existing system often
encourage and reward defendants who take intransigent
settlement positions and otherwise unethically add to the
costs and delays of settling meritorious claims for, among
other reasons, the purpose of reducing the marginal rates of
compensation received by claimants' counsel;
(5) many deserving claimants receive inequitable
compensation because--
(A) such claimants are required to pay attorneys
approximately one-third or more of any recovery even when
there is little or no issue of liability or damages and
therefore little or no assumption of risk by the attorney;
and
(B) when a defendant or its insurer has made a substantial
settlement offer before the attorney's retention or shortly
thereafter and the attorney has added little or nothing to
the value of the claim to that point, payment of a
substantial contingent fee is nonetheless generally required;
(6) the current compensation system often fails to provide
sufficient financial incentives to effectuate prompt and
adequate compensation to deserving claimants, resulting in--
(A) delays in adjudications and case settlements often
caused by intransigent defendant conduct that the present
system perversely rewards and thereby deprives claimants of
prompt compensation;
(B) a substantial burden on Federal and State courts
contributing to very high case backlogs; and
(C) regressive cost burdens and substantial avoidable costs
imposed on all parties resulting from the long delays in
resolving many claims;
(7) the current tort compensation system which results in
delays in resolving claims and which effectively provides for
increased noneconomic damages and, therefore, increased legal
fees as medical care costs increase, provides perverse
financial incentives for both more intensive and unnecessary
use of medical care providers and the fraudulent incurrence
of medical care expenses, thereby adding materially to the
Nation's health care costs and burdens;
(8) delays in resolving claims often result in more
intensive and unnecessary use of medical care providers,
thereby adding to the Nation's health care burden;
(9) the claims process gives rise to substantial, avoidable
transaction costs because of the lack of adequate incentives
for defendants and their insurers to offer prompt and
equitable settlements to meritorious claimants and because
claimants' attorneys exact a significant share of any
settlement even when their efforts do not generate or augment
the settlement offer;
(10) contingency fee practices, as described in the
preceding paragraphs, expose a clear and impermissible gap
between (A) the ethical standards established and promulgated
by courts and professed by the Bar, and (B) the actual
practices of the Bar;
(11) contingency fee practices, as described in the
preceding paragraphs, bring substantial disrepute to the Bar
and to the legal system as a whole and loss of confidence in
the rule of law itself, not the least because they create and
expose broad gaps between the stated ethical principles of
the legal profession and its real world practices;
(12) the inability of the Bar and the courts to curb
contingency fee abuses has led to higher settlement costs,
lowered compensation to injured persons, excessive medical
care costs and delayed claims processing; and
(13) there is a need for adopting a procedure to implement
appropriate ethical and legal standards and to resolve
personal injury claims more fairly and promptly.
(b) Purposes.--The purposes of this title are to--
(1) enforce more efficiently and effectively ethical
standards governing the reasonableness of lawyers' fees and
correspondingly to implement the stricter scrutiny that
courts are obliged to apply to contingent fees;
(2) reverse systemic incentives now in effect so as to
reward, and not to penalize, defendants who make substantial
early settlement offers;
(3) compensate claimants' attorneys more rationally by
calculating their compensation in relation to the value of
services rendered and risks undertaken;
(4) compensate more fairly those seeking redress for
injuries by giving them a larger share of promptly achieved
settlements;
(5) further enhance the likelihood of early settlement of
claims by preserving a larger share of early settlement
offers for claimants;
(6) lower the costs of the personal injury tort
compensation system including unnecessary medical and defense
costs;
(7) remove the burdens on interstate commerce and the
Nation's health care programs that are imposed by the current
tort compensation system;
(8) create a simple, self-enforcing system, controlled by
the parties, which forms an early basis for establishing the
sums and issues that are in dispute;
(9) reduce unworkable burdens now placed on courts and bar
grievance boards presently charged with enforcing ethical
standards through ex post facto, case-by-case fact finding
processes that pose difficult burdens of proof and impose
disproportionate transaction costs on both parties and fact
finders; and
(10) provide alternatives to across-the-board fee cap
reforms, which often provide defendants with unearned
advantages and further encourage many defendants in unethical
protraction of settlement of meritorious claims.
SEC. 202. DEFINITIONS.
For purposes of this title:
(1) The term ``allegedly responsible party'' means a
person, partnership, corporation, and an insurer thereof,
alleged by a claimant to be responsible for at least some
portion of a personal injury alleged by claimant.
(2) The term ``claim'' means an assertion of entitlement to
compensation for personal injury from an allegedly
responsible party and, to the extent subject to a contingent
fee agreement, to all other related claims arising from such
injury.
(3) The term ``claimant'' means an individual who, in his
or her own right, or vicariously as otherwise permitted by
law, is seeking compensation for personal injury.
(4) The term ``contingent fee'' means the fee negotiated in
a contingent fee agreement that is payable in fact or in
effect only from the proceeds of any recovery on behalf of
claimant.
(5) The term ``contingent fee agreement'' means a fee
agreement between an attorney and claimant wherein the
attorney agrees to bear the risk of no or inadequate
compensation in exchange for a proportionate share of any
recovery by settlement or verdict obtained for claimant.
(6) The term ``contingent fee attorney'' means an attorney
who agrees to represent claimant in exchange for a contingent
fee.
(7) The term ``fixed fee'' means an agreement between an
attorney and claimant whereby the attorney agrees to perform
a specific legal task in exchange for a specified sum to be
paid by claimant.
(8) The term ``hourly rate fee'' means the fee generated by
an agreement, or otherwise by operation of law, between an
attorney and claimant providing that claimant pay the
attorney a fee determined by multiplying the hourly rate
negotiated, or otherwise set by law, between the attorney and
claimant, by the number of hours that the attorney has worked
on behalf of claimant in furtherance of claimant's interest.
An hourly rate fee may also be a contingent fee to the extent
it is only payable in fact or in effect from the proceeds of
any recovery on behalf of claimant.
(9) The term ``injury'' means personal injury.
(10) The term ``personal injury'' means an occurrence
resulting from any act giving rise to a tort claim,
including, without limitation, bodily injury, sickness,
disease, death, or property damage accompanying bodily
injury.
(11) The term ``post-retention offer'' means an offer of
settlement in response to a demand for compensation made
within the time constraints, and conforming to the provisions
of this title, made to a claimant who is represented by a
contingent fee attorney.
(12) The term ``pre-retention offer'' means an offer to
settle a claim for compensation made to a claimant not
represented by an attorney at the time of the offer.
(13) The term ``response'' means a written communication by
claimant or an allegedly responsible party or the attorney
for either, deposited into the United States mail and sent
certified mail or delivered by an overnight delivery service.
(14) The term ``settlement offer'' means a written offer of
settlement set forth in a response within the time limits set
forth in this title.
SEC. 203. CREATION OF A FIDUCIARY RELATIONSHIP.
For purposes of this title, a fiduciary relationship
commences when a claimant consults a contingent fee attorney
to seek professional services.
SEC. 204. WRITTEN HOURLY RATE FEE AGREEMENT.
Contingent fee agreements for the representation of parties
with claims shall also include alternate hourly rate fees. If
a contingent fee attorney has not entered into a written
agreement with claimant at the time of retention setting
forth the attorney's hourly rate, then a reasonable hourly
rate is payable, subject to the limitations set forth in this
title.
SEC. 205. NATURE OF DEMAND FOR COMPENSATION.
(a) In General.--At any time after retention, a contingent
fee attorney pursuing a claim shall send a demand for
compensation by certified mail to an allegedly responsible
party, which shall set forth the material facts relevant to
the claim including--
(1) the name, address, age, marital status, and occupation
of claimant, which term for the purposes of this title
includes the injured party if claimant is operating in a
representative capacity;
(2) a brief description of how the injury occurred;
(3) the names, and, if known, the addresses, telephone
numbers, and occupations of all known witnesses to the
injury;
(4) copies of photographs in claimant's possession that
relate to the injury;
(5) the basis for claiming that the party to whom the claim
is addressed is at least partially responsible for causing
the injury;
[[Page S6102]]
(6) a description of the nature of the injury, the names
and addresses of all physicians, other health care providers,
and hospitals, clinics, or other medical service entities
that provide medical care to claimant or the injured party
including the date and nature of the service;
(7) medical records relating to the injury and those
involving a prior injury or pre-existing medical condition
which an allegedly responsible party would be able to
introduce into evidence in a trial or, in lieu of either or
both, executed releases authorizing the allegedly responsible
party to obtain such records directly from health care
providers that produced or possess them; and
(8) relevant documentation, including records of earnings
if a claimant is self-employed and employer records of
earnings if a claimant is employed, or any medical expenses,
wages lost, or other pertinent damages suffered as a
consequence of the injury.
(b) Mailing of Copies.--At the time of the mailing of the
demand for compensation, a claimant's attorney shall mail
copies of each such demand to the claimant and to every other
allegedly responsible party.
(c) Limitation on Fee.--A fee received by or contracted for
by a contingent fee attorney that exceeds 10 percent of any
settlement or judgment received by his or her client after
reasonable expenses have been deducted is unreasonable and
excessive if the attorney has sent a timely demand for
compensation but has omitted information of a material nature
that is required by this section which he or she had in his
or her possession or which was readily available to him or
her at the time of filing.
SEC. 206. TIME LIMIT FOR, AND REQUISITE CONTENTS OF, RESPONSE
SETTING FORTH SETTLEMENT OFFER.
(a) Post-Retention Offer.--To qualify its response as a
post-retention offer under this title, an allegedly
responsible party shall--
(1) issue a response stating a settlement offer within 60
days from receipt of a demand for compensation;
(2) send the response to claimant's attorney with a copy to
claimant;
(3) state that the offer is open for acceptance for a
minimum of 30 days from the time of its receipt by claimant's
attorney and further state whether it expires at the end of
this period or remains open for acceptance for a longer
period or until notice of withdrawal is given; and
(4) include with the offer copies of materials in its or
its attorney's possession concerning the alleged injury upon
which the allegedly responsible party relied in making the
settlement offer except material that such party or its
attorney believes in good faith would not be discoverable by
claimant during the course of litigation.
If reproduction costs under paragraph (4) would be
significant relative to the size of the offer, the allegedly
responsible party may, in the alternative, offer other forms
of access to the materials convenient and at reasonable cost
to claimant's attorney.
(b) Time Limitations.--If within 30 days of receipt of a
claimant's demand for compensation an allegedly responsible
party notifies an unrepresented claimant or a claimant's
attorney that it seeks to have a medical examination of
claimant, and claimant is not made available for such
examination within 10 days of receipt of the request, the
time herein provided for issuing a response is extended by 1
day for each day that the request is not honored after the
expiration of 10 days from the date of the request. Any such
extension also includes a further period of 10 days from the
date of the completion of the medical examination.
(c) Increase in Offer.--The settlement offer may be
increased during the 60-day period set forth in subsection
(a)(1) by issuing an additional offer stating that the time
for acceptance is 10 days after receipt of the additional
offer by claimant's attorney or 30 days from receipt of the
initial response, whichever is longer, unless the additional
response specifies a longer period of time for acceptance as
set forth in subsection (a)(3).
SEC. 207. CONSEQUENCES OF FAILURE TO INCLUDE PRESCRIBED
MATERIAL WITH SETTLEMENT OFFER.
(a) In General.--If an allegedly responsible party or its
attorney willfully fails to include the material required by
section 206(a)(4) with a response stating a settlement offer
or does not otherwise make such material available--
(1) a claimant may revoke its acceptance of such settlement
offer within 2 years of having accepted it; and
(2) any fees and costs reasonably incurred by a claimant in
revoking its acceptance of such settlement offer and
reinstating its claim is recoverable from the allegedly
responsible party, including the losses suffered by a
claimant who is precluded from reinstating its claim by
operation of a statute of limitations.
(b) Sanctions for Party.--Willful failure of an allegedly
responsible party to comply with section 206(a)(4) shall
subject such party to the sanctions applicable to a party who
fails to comply with requests for the production of
documents.
(c) Sanctions for Attorney.--Willful failure of an attorney
for an allegedly responsible party to comply with section
206(a)(4) shall subject that attorney to the same sanctions
applicable to attorneys who improperly counsel their clients
not to produce documents for which there has been a discovery
request.
SEC. 208. NO OBLIGATION TO ISSUE RESPONSE; INADMISSIBILITY OF
DEMANDS, RESPONSES, AND FAILURE TO RESPOND.
(a) No Obligation To Respond.--Nothing in this title
imposes on an allegedly responsible party an obligation to
issue a response to a demand for compensation.
(b) Inadmissibility of Offer.--Demands for compensation,
early settlement offers, or the failure of an allegedly
responsible party to issue same, are inadmissible in any
subsequent litigation, proceeding, or arbitration, to the
extent that evidence of settlement negotiations is
inadmissible in the jurisdiction where the case is brought.
SEC. 209. EFFECT OF PRE-DEMAND SETTLEMENT OFFER.
A settlement offer to an injured party represented by a
contingent fee counsel made before receipt of a demand for
compensation, which is open for acceptance for 60 days or
more from the time of its receipt and which conforms to the
requirements of section 206, is deemed a post-retention offer
and has the same effect under this title as if it were a
response to a demand for compensation.
SEC. 210. PRE-RETENTION OFFER.
(a) Prohibition of Percentage Fee of Pre-Retention Offer.--
It is a violation of this title for an attorney retained
after claimant has received a pre-retention offer to enter
into an agreement with claimant to receive a contingent fee
based upon or payable from the proceeds of the pre-retention
offer, provided that the pre-retention offer remains in
effect or is renewed until the time has elapsed for issuing a
response containing a settlement offer as defined under
section 206.
(b) Unreasonable and Excessive Fee.--An attorney entering
into a fee agreement that would effectively result in payment
of a percentage of a pre-retention offer to a claimant has
charged an unreasonable and excessive fee.
(c) Presumptive Reasonable Fee.--An attorney who contracts
with a claimant for a reasonable hourly rate or a reasonable
fixed fee, or who is paid such a fee for advising claimant
regarding the fairness of the pre-retention offer, has
charged a presumptively reasonable fee.
SEC. 211. POST-RETENTION OFFER WHEN A PRE-RETENTION OFFER HAS
BEEN MADE.
(a) Reasonable Fee Based on Hourly Fee.--A fee paid or
contracted to be paid to a contingent fee attorney by a
claimant who has rejected a pre-retention offer and who later
accepts a post-retention offer of a greater amount is an
unreasonable and excessive fee unless it is an hourly rate
fee that does not exceed 25 percent of the excess of the
post-retention offer over the pre-retention offer.
(b) Reasonable Fee Based on Percentage.--If the accepted
post-retention offer is less than the pre-retention offer, a
total fee for all services rendered that is greater than 10
percent of the first $100,000 of the post-retention offer
plus 5 percent of any amount that exceeds $100,000 after all
reasonable expenses have been deducted is an unreasonable and
excessive fee.
SEC. 212. POST-RETENTION OFFER WHEN NO PRE-RETENTION OFFER
HAS BEEN MADE.
A fee paid or contracted to be paid to a contingent fee
attorney by a claimant who has not received a pre-retention
offer and who has accepted a post-retention offer is an
unreasonable and excessive fee unless it is an hourly rate
fee that does not exceed 10 percent of the first $100,000 of
the offer plus 5 percent of any amount that exceeds $100,000
after all reasonable expenses have been deducted.
SEC. 213. CALCULATION OF ATTORNEY'S FEE WHEN THERE IS A
SUBSEQUENT RESOLUTION OF THE CLAIM.
Irrespective of any pre-retention offer, the provisions of
section 212 regarding maximum allowable fees remain in effect
if a post-retention offer is not accepted by claimant within
the time provided by this title. Contingent fees are
unreasonable and excessive unless charged against the
difference between an unaccepted post-retention offer and the
judgment or settlement ultimately obtained by claimant. When
such judgment or settlement is lower than the unaccepted
offer, the fee limitations of section 212 apply against the
judgment or settlement.
SEC. 214. PROVISION OF CLOSING STATEMENT.
Upon receipt of any settlement or judgment, and prior to
disbursement thereof, a contingent fee attorney shall provide
claimant with a written statement detailing how the proceeds
are to be distributed, including the amount of the expenses
paid out or to be paid out of the proceeds, the amount of the
fee, how the fee amount is calculated, and the amount due
claimant.
SEC. 215. EFFECT OF CONTRAVENING AGREEMENTS.
(a) Violation.--A contingent fee attorney who charges a fee
that contravenes this title has charged an unreasonable and
excessive fee.
(b) Excessive and Unreasonable Fees.--If the fee violates
subsection (a), then it is also excessive and unreasonable to
the extent that it has not been reduced by any reasonable
fees and costs incurred by claimant in establishing that the
fee agreement contravened this title.
(c) Unenforceable Fee Agreements.--Fee agreements between
claimants and contingent fee attorneys who have charged fees
defined under this title as unreasonable or excessive are
illegal and unenforceable except to the extent provided in
this title.
SEC. 216. INAPPLICABILITY.
(a) Evaluations and Collections.--Except for the provisions
of section 203, nothing in
[[Page S6103]]
this title applies to an agreement between a claimant and an
attorney to retain the attorney--
(1) on an hourly rate fee or fixed fee basis solely to
evaluate a pre-retention offer; or
(2) to collect overdue amounts from an accepted pre-
retention or post-retention settlement offer.
(b) Agreements in Which Certain Offers Not Made.--The
provisions of this title prohibiting the charging of
contingency fees in the absence of assuming meaningful risk
and defining reasonable and unreasonable fees, shall have no
effect on contingent fee agreements in cases in which neither
a pre-retention nor a post-retention offer of settlement is
made.
(c) Motor Vehicle Accidental Bodily Injury.--(1) This title
shall not apply to accidental bodily injury caused by the
operation or the use of a motor vehicle in claims in which an
uninsured motorist or personal protection insured is
involved.
(2) For purposes of this subsection the term ``operation or
use''--
(A) means operation or use of a motor vehicle as a motor
vehicle, including, incident to its operation or use as a
vehicle, the occupation of the vehicle;
(B) does not cover conduct within the course of a business
of manufacturing, selling, or maintaining a motor vehicle,
including repairing, servicing, washing, loading, or
unloading; and
(C) does not include such conduct not within the course of
such a business unless such conduct occurs while occupying a
motor vehicle.
TITLE III--APPLICABILITY AND RULE OF CONSTRUCTION
SEC. 301. APPLICABILITY TO STATES; CHOICE OF LAW;
JURISDICTION; AND CONSTRUCTION.
(a) Applicability to States.--Title I or II of this Act
shall not apply in a State if such State enacts a statute
that--
(1) cites the authority of this subsection; and
(2) declares the election of such State that the title
shall not apply.
(b) Choice of Law.--In disputes between citizens of States
that elect nonapplicability under subsection (a) and citizens
of States that do not so elect, ordinary choice of law
principles shall apply.
(c) Jurisdiction.--This section shall not confer
jurisdiction on the district courts of the United States
under section 1331 or 1337 or title 28, United States Code.
(d) Construction.--Nothing in this Act shall alter or
diminish the authority or obligation of the Federal courts to
construe the terms of this Act.
SEC. 302. EFFECTIVE DATE.
This Act shall take effect on the date of enactment of this
Act.
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Summary of Dole-McConnell Legal Reform Proposals
1. ``Choice'' in Auto Insurance
The principal feature of this proposal is the unbundling of
economic losses and non-economic (``pain & suffering'')
losses and enabling individuals to self-insure for non-
economic losses.
Without changing substantive state law of negligence, the
proposal would offer drivers two choices for motor vehicle
insurance:
a. Traditional tort coverage--the injured collects against
his/her own policy for economic and non-economic losses, upon
a showing that another party was at fault, pursuant to
relevant state law. If the injured's economic losses exceed
his/her policy limits, the injured will be able to sue the
negligent party for those remaining losses and to collect a
reasonable attorney's fee; or
b. Personal Injury Protection--the injured collects against
his/her policy for economic losses, regardless of fault. As
in the traditional tort coverage, if the injured's economic
loses exceed his/her policy limits, the injured will be able
to sue the negligent party for remaining economic losses,
including a reasonable attorney's fee.
In all cases of intentional injury or injury that occurs as
a result of drug or alcohol use, the injured retains the
ability to sue for both economic and non-economic losses in
accordance with applicable state law.
The Joint Economic Committee estimates that this proposal
will save consumers $40 billion annually in reduced premiums
for automobile insurance.
2. Contingent Fee Reform
This provision limits traditional contingent fee
arrangements in order to ensure that more of the proceeds of
a settlement or award will more often go to the insured
party.
First, an attorney would be required to offer all clients
an hourly rate and an hourly rate is presumed, if the
attorney does not have a specific contingent fee agreement.
Where an injured party hires a lawyer to evaluate a
settlement offer (pre-retention offer), the attorney is
prohibited from receiving a percentage of the offer. The
attorney may collect an hourly fee or a fixed fee.
In a case where an injured party retains a lawyer to engage
in settlement negotiations on his behalf, and the injured
party accepts a settlement offer, the lawyer is restricted to
a fee of 10% of the first $100,000 and 5% of amounts above
$10,000, after all reasonable expenses have been deducted.
If the settlement offer is not accepted and the case goes
to trial, the lawyer may take a contingent only out of that
portion of the award which exceeds the settlement offer. If
the judgment is lower than the settlement offer, then the
lawyer's fee is limited to the 10%/5% formula above.
3. early offer/rapid recovery
This provision, originally sponsored a decade ago by
Congressmen Richard Gephardt and Henson Moore, will encourage
an injured individual to receive an offer of full
compensation for economic losses, including future losses,
without a lawsuit. In order to encourage this offer, an
injured individual will be required, in making a claim
against the allegedly responsible party, to provide all
relevant information, including medical records. The
allegedly responsible party will have 120 days to provide
such economic compensation (the time may be extended by the
claimant), and the allegedly responsible party can verify the
information, including requesting the injured to get a
medical examination.
The claimant retains the right to reject such early offer
and may sue to recover all losses. However, noneconomic
losses, including any punitive damages may only be recovered
if the injured party proves, by clear and convincing
evidence, that the injury was caused intentionally or by
wanton misconduct.
In the event of more than one responsible party, relative
fault and proportionate contribution will be assessed by an
arbitrator.
And, the states can establish a minimum payment for serious
bodily injury (for example, a loss of a limb which may not
result in significant economic losses) that will have to be
paid to the injured party under early offer.
To satisfy the federalism concerns raised by some, the bill
will allow states to ``opt out'' of any of these
provisions.
______
By Mr. DASCHLE:
S. 1863. A bill to require the Secretary of the Army to acquire
permanent flowage and saturation easements over land that is located
within the 10-year flood plain of the James River, SD, and for other
purposes; to the Committee on Environment and Public Works.
easement acquisitions legislation
Mr. DASCHLE. Mr. President, since 1993 the James River has flooded
nearly 3 million acres of valuable farmland in my State resulting in
billions of dollars of lost revenue for South Dakota producers and
greatly diminishing the value of their land by washing away valuable
top soil.
Clearly, the extreme wet conditions of the last 4 years have
contributed to these floods. However, Mother Nature does not bear sole
responsibility for the flooding. The problem has been affected by the
James River management policy of the U.S. Army Corps of Engineers.
For producers to be asked to continue to bear these losses is unfair
and unacceptable. Downstream landowners in South Dakota should not be
required to accept financial losses directly influenced by the corps'
river management policy.
Mr. President, today I am introducing legislation that will provide
landowners along the James River with a measure of security against
future high water flows and help ensure that the Federal Government
assumes greater responsibility for the damaging effects of its river
management policies. This bill gives the U.S. Army Corps of Engineers
authority to purchase from willing sellers easements over land that is
located within the 10-year flood plain of the James River. Local
producers who wish to grant these easements not only will be reimbursed
for the loss of productivity on their flooded land, but also will
retain their haying and grazing rights. Thus, the land will continue to
provide value to farmers in relatively dry years. Those who do not wish
to grant the corps these easements will be under no obligation to do
so.
This legislation will provide some relief to landowners affected by
the frequent flooding of the James River in South Dakota and represents
part of the long-term solution to this troublesome problem. However,
the overall management of the Jamestown Dam also needs to be examined,
and I will continue to urge the corps to take seriously the concerns of
South Dakotans as the operations manual for that dam is written.
Mr. President, I ask unanimous consent that the text of the bill be
printed in the Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:
S. 1863
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
[[Page S6104]]
SECTION 1. ACQUISITION OF EASEMENTS OVER LAND NEAR JAMES
RIVER, SOUTH DAKOTA.
(a) In General.--The Secretary of the Army shall acquire,
from willing sellers, permanent flowage and saturation
easements over land that is located within the 10-year
floodplain of the James River, South Dakota.
(b) Scope.--
(1) In general.--The easements acquired by the Secretary of
the Army under subsection (a) shall include the right, power,
and privilege of the Federal Government to submerge,
overflow, percolate, and saturate the surface and subsurface
of the land and such other terms and conditions as the
Secretary of the Army considers appropriate.
(2) Haying and grazing.--The Secretary of the Army shall
permit haying and grazing on the land subject to the
easements.
(c) Payment.--In acquiring the easements under subsection
(a), the Secretary of the Army shall pay an amount based on
the unaffected fee value of the land subject to the
easements. For the purpose of this subsection, the unaffected
fee value of the land is the value that the land would have
if the land were unaffected by rising ground water and
surface flooding associated with the James River.
(d) Authorization of Appropriations.--There are authorized
to be appropriated to carry out this section $40,000,000, to
remain available until expended.
____________________