[Congressional Record Volume 144, Number 50 (Wednesday, April 29, 1998)]
[Senate]
[Pages S3784-S3791]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Mr. BENNETT:
  S. 2000. A bill to ensure that businesses, financial markets, and the 
Federal Government are taking adequate steps to resolve the year 2000 
computer problem; to the Committee on Governmental Affairs.


                 year 2000 computer problem legislation

  Mr. BENNETT. 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. 2000

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

     SECTION 1. FIDUCIARIES OF EMPLOYEE BENEFIT PLANS MUST 
                   CONSIDER YEAR 2000 COMPUTER PROBLEMS IN MAKING 
                   INVESTMENT DECISIONS.

       (a) In General.--Section 404(a) of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1104(a)) is amended by 
     adding at the end the following new paragraph:
       ``(3) A fiduciary shall not be treated as meeting the 
     requirements of paragraph (1)(B) unless--
       ``(A) the fiduciary determines that--
       ``(i) the issuer of any security in which the fiduciary 
     seeks to invest the assets of the plan has, or is taking, 
     steps to substantially eliminate any year 2000 computer 
     problem faced by the issuer, and
       ``(ii) such security is traded on a market that is prepared 
     to operate without any interruption due to the year 2000 
     computer problem, or
       ``(B) in any case where such assets are invested by an 
     insurance carrier, bank, or similar institution, the 
     fiduciary determines that such institution makes the 
     determinations described in subparagraph (A) with respect to 
     the investment of such assets.''
       (b) Effective Date.--The amendment made by this section 
     shall apply to investments made by a fiduciary, and contracts 
     to invest plan assets entered into with insurance carriers, 
     banks, and similar institutions, on or after the date of the 
     enactment of this Act.

     SEC. 2. STEPS TO ENSURE THE FEDERAL GOVERNMENT ADDRESSES YEAR 
                   2000 COMPUTER PROBLEM.

       (a) President's Council on Year 2000 Conversion.--
       (1) In general.--The President shall establish the 
     President's Council on Year 2000 Conversion (the ``Council'') 
     which shall be chaired, at the President's discretion, by an 
     Assistant to the President.
       (2) Membership.--
       (A) In general.--The Council shall be composed of 1 
     representative from each of the executive departments and 
     from such other Federal agencies as the Chair shall 
     designate.
       (B) Vice chair; other personnel.--The Chair shall appoint a 
     Vice Chair and shall assign other responsibilities to members 
     of the Council as the Chair determines necessary.
       (3) Functions.--The Chair shall--
       (A) oversee the activities of executive departments and 
     other Federal agencies to assure that their computer systems 
     operate smoothly through the year 2000,
       (B) provide policy direction to, and receive reports and 
     data from, executive departments and other Federal agencies, 
     as is necessary to ensure progress and compliance with 
     Federal standards for remediation of the year 2000 computer 
     problem,
       (C) allocate resources for correcting critical year 2000 
     computer problems among executive departments and other 
     Federal agencies in order to meet critical deadlines, and
       (D) utilize any existing authorities granted to the 
     executive branch, or recommend to the Congress other 
     appropriate plans, for the retention of critical personnel 
     needed to address the Federal Government's year 2000 computer 
     problem in a timely manner.
       (4) Cooperation.--The head of each executive department and 
     any other Federal agency shall cooperate to the fullest 
     extent with the Council.
       (b) Report.--The Director of the Office of Management and 
     Budget shall report quarterly to the Congress on the progress 
     made by the Federal Government--
       (1) in achieving year 2000 compliance, and
       (2) in obtaining and retaining the resources and personnel 
     necessary to achieve an orderly conversion to year 2000 
     compliance.
                                 ______
                                 
      By Mr. MURKOWSKI (for himself, Mr. Lott, and Mr. Baucus):
  S. 2001. A bill to amend the Indian Health Care Improvement Act to 
make permanent the demonstration program that allows for direct billing 
of medicare, medicaid, and other third party payors, and to expand the 
eligibility under such program to other tribes and tribal 
organizations; to the Committee on Indian Affairs.


 the alaska native and american indian direct reimbursement act of 1998

  Mr. MURKOWSKI. Mr. President, today I rise on behalf of myself and 
Majority Leader Lott, Senator Baucus, and Senator Campbell, to 
introduce legislation which would permanently authorize and expand the 
Medicare and Medicaid direct collections demonstration program under 
section 405 of the Indian Health Care Improvement Act.
  This act will end much of the redtape and bureaucracy for IHS 
facilities involved with Medicare and Medicaid reimbursement, and will 
mean more Medicaid and Medicare dollars to Native health facilities to 
use for improving health care.
  Our bill will allow Native hospitals to collect Medicare and Medicaid 
funds directly from the Health Care Financing Administration instead of 
having to go through the maze of regulations mandated by HIS.
  This bill is an expansion of a current demonstration project that 
includes Bristol Bay Health Corporation of Dillingham, Alaska; the 
Southeast Alaska Regional Health Corporation of Sitka, Alaska; the 
Mississippi Choctaw Health Center of Philadelphia, Mississippi; and the 
Choctaw Tribe of Durant, Oklahoma. All of the participants in the 
demonstration program--as well as the Department of Health and Human 
Service and the Indian Health Services--report that the program is a 
great success. In fact, the program has:
  Dramatically increased collections for Medicare and Medicaid 
services, which in turn has provided badly-needed revenues for Indian 
and Alaska Native health care; significantly reduced the turn-around 
time between billing and the receipt of payment for Medicare and 
Medicaid services; and increased the administrative efficiency of the 
participating facilities by empowering them to track their own Medicare 
and Medicaid billings and collections.
  In 1996, when the demonstration program was about to expire, Congress 
extended it through FY 1998. This extension has allowed the 
participants to continue their direct billing and collection efforts 
and has provided Congress with additional time to consider whether to 
permanently authorize the program.
  Because the demonstration program is again set to expire at the end 
of FY 98, it is time to recognize the benefits of the demonstration 
program by enacting legislation that would permanently authorize it and 
expand it to other eligible tribal participants.
  I hope that my colleagues will support this important legislation.
                                 ______
                                 
      By Mr. REID:

[[Page S3785]]

  S. 2003. A bill to amend title II of the Social Security Act to allow 
workers who attain age 65 after 1981 and before 1992 to choose either 
lump sum payments over four years totalling $5,000 or an improved 
benefit computation formula under a new 10-year rule governing the 
transition to the changes in benefit computation rules enacted in the 
Social Security Amendments of 1977, and for other purposes; to the 
Committee on Finance.


                       notch fairness act of 1998

  Mr. REID. Mr. President, I rise today to introduce legislation that 
would correct a problem which plagues a special group of older 
Americans. I am speaking on behalf of those affected by the Social 
Security notch.
  For my colleagues who may not be aware, the Social Security notch 
causes 11 million Americans born between the years 1917-1926 to receive 
less in Social Security benefits than Americans born outside the notch 
years due to changes made in the 1977 Social Security benefit formula.
  I have felt compelled over the years to speak out about this issue 
and the injustice it imposes on millions of Americans. The notch issue 
has been debated and debated, studied and studied, yet to date, no 
solution to it has been found. Because of this, many older Americans 
born during this period must scrimp to afford the most basic of 
necessities.
  Mr. President, I am the first to acknowledge that with any projected 
budget surplus we must save Social Security. In many ways, my 
legislation does just this. It restores confidence to the many notch 
victims around the country and will show them that we in Congress will 
accept responsibility for any error that was made. We should not ask 
them to accept less as a result of our mistake. While we must save 
Social Security for the future, we have an obligation to those, who 
through no fault of their own, receive less than those that were 
fortunate enough to be born just days before or after the notch period.
  I believe we owe a debt to notch babies. Like any American family, we 
must first pay the bills before we invest in the future. With a surplus 
projected for this fiscal year, we have the resources to make good on 
our debt to notch babies. We should come forward and honor our 
commitment.
  Mr. President, the ``notch'' situation had its origins in 1972, when 
Congress decided to create automatic cost-of-living adjustments to help 
Social Security benefits keep pace with inflation. Previously, each 
adjustment had to await legislation, causing beneficiaries' monthly 
payments to lag behind inflation. When Congress took this action, it 
was acting under the best of intentions.
  Unfortunately, this new benefit adjustment method was flawed. To 
function properly, it required that the economy behave in much the same 
fashion that it had in the 1950s and 1960s, with annual wage increases 
outpacing prices, and inflation remaining relatively low. As we all 
know, that did not happen. The rapid inflation and high unemployment of 
the 1970s generated increases in benefits. In an effort to end this 
problem, in 1977 Congress revised the way that benefits were computed. 
In making its revisions, Congress decided that it was not proper to 
reduce benefits for persons already receiving them; it did, however, 
decide that benefits for all future retirees should be reduced. As a 
result, those born after January 1, 1917 would, by design, receive 
benefits that were, in many cases, far less. In an attempt to ease the 
transition to the new, lower benefit levels, Congress designed a 
special ``transitional computation method'' for use by beneficiaries 
born between 1917 and 1921.

  Mr. President, we have an obligation to convey to our constituents 
that Social Security is a fair system. In town hall meetings back home 
in Nevada, I have a hard time trying to tell that to a notch victim. 
They feel slighted by their government and if I were in their situation 
I would too. Through no fault of their own, they receive less, 
sometimes as much as $200 less, than their neighbors.
  The legislation I am offering today is my proposal to right the 
wrong. I propose using any projected budget surplus to pay the lump sum 
benefit to notch babies. While we have a surplus, let's fix the notch 
problem once and for all and restore the confidence of the ten million 
notch babies across this land.
  Government has an obligation to be fair. I don't think we have been 
in the case of notch babies. My support of notch babies is 
longstanding. I introduced the only notch amendment in April 1991 that 
ever passed in Congress as part of the fiscal year 1992 Budget 
Resolution. Unfortunately, it did not become the law of the land as it 
was dropped in Conference with the House of Representatives. I have 
cosponsored numerous pieces of legislation over the years to address 
this issue. With this legislation, my effort continues.
  Mr. President, it is unfortunate that these measures have not seen 
the light of day. Many who have written to me think Congress is waiting 
for notch babies to die rather than honor this debt. I must tell you it 
concerns me when our constituents have this perception of their elected 
representatives. Unfortunately, the truth is that today a number of 
notch babies will die. We will not have to worry about those notch 
babies, or honor our debt to them. This is the wrong approach.
  Each day a grave injustice is perpetrated when these people pass 
away. We have to do something to make sure Americans believe that 
Social Security is a fair system. Passage of my legislation provides us 
that chance. I invite members to join me in cosponsoring this important 
legislation.
  I acknowledge that the battle for notch reform suffered a major 
setback when on December 31, 1994, the Commission on the Social 
Security ``Notch'' issue released its final report. It concluded that 
the ``benefits paid to those in the `Notch' years are equitable, and no 
remedial legislation is in order.'' The National Committee to Preserve 
Social Security and Medicare strongly disagreed with the Committee's 
methodology and conclusions. Although they have stopped advocating for 
this issue due to the political and fiscal climate, their disagreement 
with the outcome is nonetheless significant.

  The Commission's report also stated ``in retrospect'' Congress 
``Probably should have'' limited the benefits of those who were 
grandfathered, but that it is too late now to do so given their 
advanced age. Since we did not do the right thing then, I propose that 
we do the right thing now. Let's show we have the courage to correct a 
mistake when we have made one. The Commission report provided political 
cover for those who were opposed to notch reform legislation. I have 
long opposed ``political'' solutions to problems such as this.
  My legislation is intended to make good on what this government 
should have done long ago. I propose that workers who attain the age of 
65 after 1981 and before 1992 be allowed to choose either lump sum 
payment over four years totaling $5,000 or an improved benefit 
computation formula under a new 10-year rule governing the transition 
to the changes in benefit computation rules enacted in the Social 
Security Amendments of 1977.
  As of December 1996, there were 11,637,390 recipients born between 
1917 and 1926 who were receiving Social Security retirement benefits. 
By providing each with a $5,000 lump sum payment or an improved benefit 
computation formula, maximum costs would be $60 billion spread over 
four years or $15 billion annually.
  There are some who would say there are ``bigger fish to fry'' such as 
Social Security solvency and Medicare's long term solvency. While I am 
in full agreement that these are very important issues that I intend to 
work on, we should include in our discussion concerning uses of any 
budget surplus, to repair the damage that has been done as a result of 
notch. Living on a fixed income is not easy. Many notch babies have 
difficulty making ends meet. This one time lump sum payment would 
provide much needed financial support for some of this nation's most 
needy citizens.
  Mr. President, it is time to return these dollars to the hands of 
those who earned them. It is time to show our support for notch reform. 
All of our offices have staff to help us answer the mail. We tell our 
constituents what bills have been offered and that we will lend our 
support if their issue comes to a vote.
  Well, here is our change. I am introducing this legislation because 
actions speak louder than words. The ``Notch

[[Page S3786]]

Fairness Act of 1998'' that I am introducing on behalf of notch victims 
today, is intended to put my words into action. I ask all my colleagues 
to join me in support of this important and long overdue legislation.
                                 ______
                                 
      By Mr. McCONNELL:
  S. 2005. A bill to amend the Federal Power Act to ensure that certain 
Federal power customers are provided protection by the Federal Energy 
Regulatory Commission, and for other purposes; to the Committee on 
Energy and Natural Resources.


                  TVA CUSTOMER PROTECTION ACT OF 1998

  Mr. McCONNELL. Mr. President, I have come to the Senate floor today 
to introduce a bill that is long overdue. Known as the TVA Customer 
Protection Act, this legislation will implement a number of consumer 
reforms to make TVA accountable to ratepayers and better prepare TVA to 
compete in a restructured electricity market.

  The bill I am introducing provides Tennessee Valley ratepayers a 
number of consumer protections against unchecked and unjustified 
increases in their power rates. This bill will put an end to TVA's 
ability to compete unfairly with its regional distributors. This bill 
will prohibit TVA from sticking ratepayers with the bill for TVA's 
international forays that have no relevance to TVA's responsibility to 
provide low cost power to the Tennessee Valley. Finally, this bill also 
codifies an agreement between TVA and several industry associations to 
limit TVA's authority as a government entity to compete with small 
businesses in non-electric services.
  Mr. President, TVA is a federal corporation that was first formed in 
1933, to tame the Tennessee River, our nation's fifth largest river, 
and to bring economic development to this once poverty stricken region. 
Over the years as the Valley has developed, TVA has evolved in their 
role as a river steward to become the largest power producer in the 
nation. Today, TVA provides power to all of Tennessee and to parts of 
six other states covering over 80,000 square miles and serving eight 
million consumers. The bulk of TVA's power sales are made through 
municipal and cooperative distributors, which in turn are responsible 
for delivering that power to every home, office and farm in the Valley. 
TVA has exclusive power contracts with its distributors and the three 
member TVA board sets the retail rates offered by distributors. TVA 
also has the authority to compete directly with distributors to make 
retail sales to large industrial customers.
  Mr. President, over the past 65 years, TVA has accumulated an 
enormous debt of nearly $28 billion, despite being a monopoly power 
provider. TVA is also carrying $6.3 billion in deferred assets that 
will eventually force electricity rates higher in the future. By 
deferring these charges, TVA's financing costs will continue to mount. 
I have real concerns about how this debt load will affect rates as well 
as the overall economic health of the region.
  In 1997, GAO found that TVA paid over 35 percent of its power revenue 
to servicing its debt. In other words, TVA pays an astronomical 35 
cents of every $1 earned to interest. Compare that to a public utility 
which paid a mere 7 percent in finance costs. In a 1994 study, GAO 
found that 69 percent of TVA's total debt is tied to the nuclear 
facilities, yet they generated only 14 percent of TVA's total power 
production in 1994. This study concluded that TVA's financial condition 
``threatens its long-term viability and places the federal government 
at risk.''
  Only through years of unaccountability and fiscal irresponsibility 
could a power company have ever reached this level of debt despite the 
fact that TVA is a monopoly provider of electricity. Therefore, I have 
come to the conclusion that TVA needs to be made more accountable for 
their actions. Not more accountable to Congress or the President, but 
the people they were charged to serve--the TVA customers.
  Mr. President, it is my desire to provide TVA customers with a clear 
picture of TVA's financial situation including TVA's rates, charges and 
costs. The Federal Energy Regulatory Commission (FERC) is authorized 
under the Federal Power Act with regulating electric utilities.
  FERC provides regulatory oversight to over 200 utilities for 
wholesale and transmission power rates to ensure that their electric 
rates and charges are ``just and reasonable and not unduly 
discriminatory or preferential.'' At present, TVA is entirely exempt 
from these necessary regulations allowing it to operate as a self-
regulating monopoly, with no such mandate for openness fairness or 
oversight.
  Requiring TVA to comply with FERC regulations will serve two 
purposes. First, it will allow customers to accurately evaluate TVA's 
wholesale and transmission pricing and terms to ensure the rates 
charged are ``just and reasonable'' and to provide customers with a 
forum for challenging future rate increases just as every other 
regulated utility does.
  Second, this information will provide FERC with a better 
understanding of the stranded costs TVA has accumulated. Understanding 
the full scope of these costs will be critical in an open transmission 
and wholesale market. It will also have a significant impact in 
determining how competitive TVA will be in the future.
  Last year, former FERC Chair Elizabeth Moler testified before the 
Senate Energy Committee regarding nationwide open access in the 
transmission and wholesale markets. She stated that, ``like Swiss 
cheese, nationwide open access has some holes. Federal legislation is 
necessary to fill in these holes.'' It was her belief that TVA's large 
transmission system must be included within FERC's open access program.
  Recently, I read an article written by Carlos Smith, the General 
Counsel to TVPPA, an association which represents TVA distributors. Mr. 
Smith made the case that investor-owned utilities should be regulated, 
``because only in this way can the captive ratepayers learn the 
underlying basis for the retail utility rates and require justification 
for the charges made for services.''

  Mr. President, I wholeheartedly concur with Mr. Smith's conclusion 
that ratepayers, including the distributors Mr. Smith represents, 
should know what their rates are based on and have a justification for 
such rates. Further, ratepayers should be able to challenge, through 
FERC, any rate increase they find unreasonable.
  Mr. President, let me point out one very important provision in this 
legislation. I have included a provision that makes it explicitly clear 
that nothing in this bill would change the law applying to TVA 
distributors. Unlike TVA, distributors are directly accountable to the 
customers they serve. Cooperatives, for example, are operated by a 
board elected by the customers to represent their own member interests. 
I don't believe we need to change this policy, except to make TVA more 
accountable to the people they serve.
  Mr. President, I expect TVA to complain that this legislation somehow 
treats them unfairly. They will attempt to blame me for unfairly 
burdening them with new accountability standards and claim that a rate 
increase will be a direct result.
  Mr. President, I don't believe Valley residents will be fooled by 
TVA's rhetoric when they recall TVA's track record. It's hard to argue 
that the TVA Board has kept ratepayers' interests foremost in mind as 
they ran up $28 billion in debt, while serving a captive customer base. 
It's hard to argue it was in the ratepayers' interest to try to hide 
million dollar bonuses to a select cadre of high level staff. It is 
hard to argue that it was in the ratepayers' interest to zero out all 
federal appropriations, which could add millions to TVA's annual 
operating costs.
  Mr. President, I have carefully compared the rates of regulated 
utilities in Kentucky against TVA's rates to determine if applying 
these regulations would drive rates higher. Much to my surprise, I have 
found that not only are regulated utilities rates very competitive, but 
lower than rates offered by TVA. This confirms my assumption that the 
underlying financial health of TVA--and its $28 billion debt--has a far 
greater impact on its electric rates than any other factor.
  Mr. President, since 1988, wholesale power rates of regulated 
utilities in Kentucky have steadily fallen, while TVA has maintained 
the same level, until last year when TVA raised rates by 7 percent. It 
is appearent to me that due to TVA's past financial mismanagement, 
thousands of Kentucky resident are not able to take advantage

[[Page S3787]]

of the declining rates. Mr. President, I ask that this chart be printed 
in the record at this point.
  Mr. President, in addition to applying FERC regulation to TVA I have 
included a number of other important customer reforms. As I mentioned 
earlier, this bill prohibits TVA from continuing to subsidize their 
foreign endeavors at ratepayers expense. Quarter million dollar 
conferences in China and other points on the globe are not consistent 
with either TVA's deficit reduction goals or its mission to be a low 
cost power provider to the valley.
  Another provision that I have included is a measure proposed by the 
TVA distributors. Section Five in the bill protects distributors from 
unfair competition by ending TVA's ability to directly serve large 
industrial customers. In the past, TVA has been able to directly serve 
some of the valley's largest industrial customers. Through this 
loophole, TVA is able to use it considerable market power to unfairly 
compete with distributors. This provision also facilitates the 
transition from TVA to FERC regulation. To protect the sanctity of the 
existing contracts, FERC is directed to accept the terms and conditions 
of those contracts without initial review.
  Section Seven of this bill will increase TVA's level of 
accountability by applying all federal antitrust laws and penalties. I 
have included this provision in response to heavy-handed tactics used 
by TVA to punish the City of Bristol, Virginia for signing a contract 
with another energy provider. Last year, Bristol Virginia Utilities 
Board signed an agreement with Cinergy Corporation to provide its 
wholesale power, which yielded a savings of $70 million for Bristol 
after fulfilling the terms of the contract with TVA. What Bristol 
didn't expect was the backlash from TVA and effort to punish Bristol 
for leaving the TVA family.
  In testimony before the Senate Energy Committee, the Chairman of the 
Bristol Utility Board, David Fletcher, outlined the anti-competitive 
practices employed by TVA to undermine Bristol's new contract. TVA 
applied scare tactics by predicting unreliable electricity services as 
a discouragement to leaving. TVA also sought to recover tens of 
millions invested by TVA to provide power to Bristol, despite the fact 
that Bristol had fulfilled the terms of their contract. Finally, TVA 
attempted to steal Bristol's industrial customers by offering direct-
serve power contracts at 2 percent below any rate offered by Bristol. I 
find these predatory practices to be entirely unacceptable, especially 
for an entity of the federal government. It is my belief that since 
TVA's activities were performed in a commercial endeavor, they should 
be held to the same standards as any other corporation under the 
antitrust laws.
  Recently, I was informed that TVA willing to subject themselves to 
the federal antitrust laws, so long as they weren't subject to any 
penalties.
  Mr. President, I have some advice for TVA. If you can't pay the fine, 
don't do the crime.
  My bill's final provision regards TVA's ability to branch out into 
other businesses beyond power generation and transmission. TVA's has 
attempted to diversify into equipment leasing as well as engineering 
and other contracting services in direct competition with other valley 
businesses.
  Mr. President, I hope these reforms will offer TVA customers--both 
distributors and individuals alike--the means to make TVA more 
accountable. I am very concerned, however, that these reforms may be 
too late to avert a gradual increase in power rates within the TVA 
region. Last year, for the first time in 10 years, TVA raised rates on 
households and business by over 7 percent in order to prepare for a 
more open electricity market. This can be contrasted with a 15 percent 
decline in rates over the past ten years in Kentucky--outside the TVA 
fence.
  I remain hopeful that with these reforms, TVA's Board will be more 
accountable to ratepayers and will help ensure that the economic 
potential of the Tennessee Valley, which was mortgaged by years of 
fiscal unaccountability, will not be diminished.
  Mr. President, I ask unanimous consent that the full 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. 2005

       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 ``TVA Customer Protection Act 
     of 1998''.

     SEC. 2. INCLUSION IN DEFINITION OF PUBLIC UTILITY.

       (a) In General.--Section 201(e) of the Federal Power Act 
     (16 U.S.C. 824(e)) is amended by inserting before the period 
     at the end the following: ``, and includes the Tennessee 
     Valley Authority''.
       (b) Conforming Amendment.--Section 201(f) of the Federal 
     Power Act (16 U.S.C. 824(f)) is amended by striking 
     ``foregoing, or any corporation'' and inserting ``foregoing 
     (other than the Tennessee Valley Authority) or any 
     corporation''.

     SEC. 3. DISPOSITION OF PROPERTY.

       Section 203 of the Federal Power Act (16 U.S.C. 824b) is 
     amended by adding at the end the following:
       ``(c) TVA Exception.--This section does not apply to a 
     disposition of the whole or any part of the facilities of the 
     Tennessee Valley Authority if--
       ``(1) the Tennessee Valley Authority discloses to the 
     Commission (on a form, and to the extent, that the Commission 
     shall prescribe by regulation) the sale, lease, or other 
     disposition of any part of its facilities that--
       ``(A) is subject to the jurisdiction of the Commission 
     under this Part; and
       ``(B) has a value of more than $50,000; and
       ``(2) all proceeds of the sale, lease, or other disposition 
     under paragraph (1) are applied by the Tennessee Valley 
     Authority to the reduction of debt of the Tennessee Valley 
     Authority.''.

     SEC. 4. FOREIGN OPERATIONS; PROTECTIONS.

       Section 208 of the Federal Power Act (16 U.S.C. 824g) is 
     amended by adding at the end the following:
       ``(c) Tennessee Valley Authority.--
       ``(1) Limit on charges.--
       ``(A) No authorization or permit.--The Commission shall 
     issue no order under this Act that has the effect of 
     authorizing or permitting the Tennessee Valley Authority to 
     make, demand, or receive any rate or charge, or impose any 
     rule or regulation pertaining to a rate or charge, that 
     includes any costs incurred by or for the Tennessee Valley 
     Authority in the conduct of any activities or operations 
     outside the United States.
       ``(B) Unlawful rate.--
       ``(i) In general.--Any rate, charge, rule, or regulation 
     described in subparagraph (A) shall be deemed for the 
     purposes of this Act to be unjust, unreasonable, and 
     unlawful.
       ``(ii) No limitation on authority.--Clause (i) does not 
     limit the authority of the Commission under any other 
     provision of law to regulate and establish just and 
     reasonable rates and charges for the Tennessee Valley 
     Authority.
       ``(2) Annual report.--The Tennessee Valley Authority shall 
     annually--
       ``(A) prepare and file with the Commission, in a form that 
     the Commission shall prescribe by regulation, a report 
     setting forth in detail any activities or operations engaged 
     in outside the United States by or on behalf of the Tennessee 
     Valley Authority; and
       ``(B) certify to the Commission that the Tennessee Valley 
     Authority has neither recovered nor sought to recover the 
     costs of activities or operations engaged in outside the 
     United States by or on behalf of the Tennessee Valley 
     Authority in any rate, charge, rule, or regulation on file 
     with the Commission.''.

     SEC. 5. TVA POWER SALES.

       (a) In General.--Part II of the Federal Power Act (16 
     U.S.C. 824 et seq.) is amended by adding at the end the 
     following:

     ``SEC. 215. TVA POWER SALES.

       ``(a) In General.--The Tennessee Valley Authority shall not 
     sell electric power to a retail customer that will consume 
     the power within the area that, on the date of enactment of 
     this section, is assigned by law as the distributor service 
     area, unless--
       ``(1) the customer (or predecessor in interest to the 
     customer) was purchasing electric power directly from the 
     Tennessee Valley Authority as a retail customer on that date;
       ``(2) the distributor is purchasing firm power from the 
     Tennessee Valley Authority in an amount that is equal to not 
     more than 50 percent of the total retail sales of the 
     distributor; or
       ``(3) the distributor agrees that the Tennessee Valley 
     Authority may sell power to the customer.
       ``(b) Retail Sales.--Notwithstanding any other provision of 
     law, the rates, terms, and conditions of retail sales of 
     electric power by the Tennessee Valley Authority that are not 
     prohibited by this section shall be subject to regulation 
     under State law applicable to public utilities in the manner 
     and to the extent that a State commission or other regulatory 
     authority determines appropriate.''.
       (b) Transition.--
       (1) Filing requirement.--Not later than 180 days after the 
     date of enactment of this Act, the Tennessee Valley Authority 
     shall file all rates and charges for the transmission or sale 
     of electric energy and the classifications, practices, and 
     regulations affecting those rates and charges, together with 
     all contracts that in any manner affect or relate to 
     contracts that are required to be filed under Part II of the 
     Federal Power Act

[[Page S3788]]

     (16 U.S.C. 824 et seq.), as amended by subsection (a), and 
     that are in effect as of the date of enactment of this Act.
       (2) No initial review.--A filing under this section that is 
     timely made under subsection (a) shall be accepted for filing 
     without initial review by the Federal Energy Regulatory 
     Commission.

     SEC. 6. FILING AND FULL DISCLOSURE OF TVA DOCUMENTS.

       Part III of the Federal Power Act (16 U.S.C. 825 et seq.) 
     is amended--
       (1) by redesignating sections 319 through 321 as sections 
     320 through 322, respectively; and
       (2) by inserting after section 318 the following:

     ``SEC. 319. FILING AND FULL DISCLOSURE OF TVA DOCUMENTS.

       ``(a) In General.--The Tennessee Valley Authority shall 
     file and disclose the same documents and other information 
     that other public utilities are required to file under this 
     Act, as the Commission shall require by regulation.
       ``(b) Regulation.--
       ``(1) Timing.--The regulation under subsection (a) shall be 
     promulgated not later than 1 year after the date of enactment 
     of this section.
       ``(2) Considerations.--In promulgating the regulation under 
     subsection (a), the Commission shall take into consideration 
     the practices of the Commission with respect to public 
     utilities other than the Tennessee Valley Authority.''.

     SEC. 7. APPLICABILITY OF THE ANTITRUST LAWS.

       The Tennessee Valley Authority Act of 1933 (16 U.S.C. 831 
     et seq.) is amended by inserting after section 16 the 
     following:

     ``SEC. 17. APPLICABILITY OF THE ANTITRUST LAWS.

       ``(a) Definition of Antitrust Laws.--In this section, the 
     term `antitrust laws' means--
       ``(1) an antitrust law (within the meaning of section (1) 
     of the Clayton Act (15 U.S.C. 12));
       ``(2) the Act of June 19, 1936 (commonly known as the 
     `Robinson Patman Act') (49 Stat. 1526, chapter 323; 15 U.S.C. 
     13 et seq.); and
       ``(3) section 5 of the Federal Trade Commission Act (15 
     U.S.C. 45), to the extent that the section relates to unfair 
     methods of competition.
       ``(b) Applicability.--Nothing in this Act modifies, 
     impairs, or supersedes the antitrust laws.
       ``(c) Antitrust Laws.--
       ``(1) TVA deemed a person.--The Tennessee Valley Authority 
     shall be deemed to be a person, and not government, for 
     purposes of the antitrust laws.
       ``(2) Applicability.--Notwithstanding any other provision 
     of law, the antitrust laws (including the availability of any 
     remedy for a violation of an antitrust law) shall apply to 
     the Tennessee Valley Authority notwithstanding any 
     determination that the Tennessee Valley Authority is a 
     corporate agency or instrumentality of the United States or 
     is otherwise engaged in governmental functions.''.

     SEC. 8. SAVINGS PROVISION.

       (a) Definition of TVA Distributor.--In this section, the 
     term ``TVA distributor'' means a cooperative organization or 
     publicly owned electric power system that, on January 2, 
     1998, purchased electric power at wholesale from the 
     Tennessee Valley Authority under an all-requirements power 
     contract.
       (b) Effect of Act.--Nothing in this Act or any amendment 
     made by this Act--
       (1) subjects any TVA distributor to regulation by the 
     Federal Energy Regulatory Commission; or
       (2) abrogates or affects any law in effect on the date of 
     enactment of this Act that applies to a TVA distributor.

     SEC. 9. PROVISION OF CONSTRUCTION EQUIPMENT, CONTRACTING, AND 
                   ENGINEERING SERVICES.

       Section 4 of the Tennessee Valley Authority Act of 1933 (16 
     U.S.C. 831c) is amended by adding at the end the following:
       ``(m) Provision of Construction Equipment, Contracting, and 
     Engineering Services.--
       ``(1) In general.--Notwithstanding any other provision of 
     this Act, except as provided in this subsection, the 
     Corporation shall not have power to--
       ``(A) rent or sell construction equipment;
       ``(B) provide a construction equipment maintenance or 
     repair service;
       ``(C) perform contract construction work; or
       ``(D) provide a construction engineering service;
     to any private or public entity.
       ``(2) Electrical contractors.--The Corporation may provide 
     equipment or a service described in subparagraph (1) to a 
     private contractor that is engaged in electrical utility work 
     on an electrical utility project of the Corporation.
       ``(3) Customers, distributors, and governmental entities.--
     The Corporation may provide equipment or a service described 
     in subparagraph (1) to--
       ``(A) a power customer served directly by the Corporation;
       ``(B) a distributor of Corporation power; or
       ``(C) a Federal, State, or local government entity;
     that is engaged in work specifically related to an electrical 
     utility project of the Corporation.
       ``(4) Used construction equipment.--
       ``(A) Definition of used construction equipment.--In this 
     paragraph, the term `used construction equipment' means 
     construction equipment that has been in service for more than 
     2,500 hours.
       ``(B) In general.--The Corporation may dispose of used 
     construction equipment by means of a public auction conducted 
     by a private entity that is independent of the Corporation.
       ``(C) Debt reduction.--The Corporation shall apply all 
     proceeds of a disposition of used construction equipment 
     under subparagraph (B) to the reduction of debt of the 
     Corporation.''.
                                 ______
                                 
      By Mr. GRAMS (for himself, Mr. Coverdell, Mr. Frist, Mr. McCain, 
        Mr. Hutchinson, Mr. Smith of Oregon, Mr. Graham, and Mr. 
        D'Amato):
  S. 2004. A bill to amend the Internal Revenue Code of 1986 to 
authorize the Secretary of the Treasury to abate the accrual of 
interest on income tax underpayments by taxpayers located in 
Presidentially declared disaster areas if the Secretary extends the 
time for filing returns and payment of tax for such taxpayers; to the 
Committee on Finance.


                 The Disaster Victim Tax Extension Act

  Mr. GRAMS. Mr. President, I rise today to introduce legislation that 
would permanently exempt the interest payments owed by disaster victims 
to the Internal Revenue Service.
  Each year, our country is hit by a variety of natural disasters such 
as hurricanes, tornadoes, earthquakes, floods, and ice storms, all 
causing extreme hardship for hundreds of thousands of Americans.
  This year, 15 States have already been hit by deadly disasters.
  Starting on March 7, severe storms and flooding struck the State of 
Alabama, damaging nearly 1,200 homes, and the city of Elba in Coffee 
County was evacuated as a result of a levee failure. Three deaths were 
attributed to the floods and one person was reported missing.
  On February 9, 27 California counties were wracked by severe storms.
  During the period of January 28 through February 6, a series of 
severe winter storms hit communities in Sussex County of Delaware.
  Also in February, three southern Florida counties were victimized by 
tornadoes and other violent weather.
  In February, six counties in Georgia were struck by tornadoes. On 
March 20, amid flood recovery efforts, tornadoes and windstorms tore 
through northeast Georgia, adding to the overall devastation. Tornadoes 
again touched down in west Georgia, metro Atlanta, and southeast 
Georgia on April 9.
  In February, Atlantic and Cape May counties in southern New Jersey 
were hit by the coastal storm that lashed the area.
  On April 16, six Tennessee counties were ravaged by deadly tornadoes 
and other violent weather.
  And, Mr. President, on March 29, seven counties in my own State of 
Minnesota were hit by the deadly tornadoes, damaging thousands of homes 
and businesses along a 62-mile path carved through the communities of 
St. Peter, Comfrey, and Le Center. The storms claimed two lives.
  The estimated total dollar value of insured losses caused by the 
south-central Minnesota tornadoes has reached $175 million, exceeding 
insured losses incurred in my state during the floods of one year ago.
  The list goes on and on. But my point is: deadly natural disasters 
occur every year. Lives are lost, homes are demolished, property is 
destroyed, businesses are ruined, and crops are wiped out. The 
survivors of these disasters need our help to get their feet back on 
the ground.
  Federal disaster assistance has been effective. In fact, almost all 
of the major disaster sites have been subsequently designated as 
Presidentially declared disaster areas and are eligible to receive 
federal disaster assistance.
  However, there is one hurdle Congress still must remove. Residents in 
Presidentially declared disaster areas can often get an extension to 
file their income tax returns.
  However, interest owed cannot be exempted by the IRS. That requires 
Congressional action.
  In other words, we give them time, an extension to file their taxes, 
but at the same time we are saying, because you cannot because of 
circumstances beyond your control file, we are going to charge you 
interest on it. That is adding insult to injury.

[[Page S3789]]

  So many States, like Minnesota, immediately have granted exemptions 
for interest payments on State taxes when disaster areas are declared.
  Although Congress has granted such Federal waivers in the past, they 
must be done legislatively each time a disaster occurs, and appropriate 
vehicles are not always available. This creates one more uncertainty 
for victims of disaster.
  The legislation I am here to introduce today along with Senators 
Coverdell, Frist, McCain, Hutchinson, and Smith of Oregon, the bill 
called the Disaster Victim Tax Extension Act, would once and for all 
remove this barrier and it would give residents of Presidentially 
declared disaster areas an interest payment exemption on any Federal 
taxes owed.
  By the way, Mr. President, our legislation would be effective 
retroactively to tax year 1997.
  Mr. President, this may seem like a small matter, but for disaster 
survivors, every dollar counts. I urge my colleagues to support this 
legislation.
                                 ______
                                 
      By Mr. ABRAHAM (by request):
  S. 2006. A bill to amend the Act establishing the Keweenaw National 
Historical Park, and for other purposes; to the Committee on Energy and 
Natural Resources.


                   keweenaw national historical park

  Mr. ABRAHAM. Mr. President, on behalf of the administration, I rise 
today to introduce legislation to amend the Act establishing the 
Keweenaw National Historical Park, and for other purposes. I ask 
unanimous consent that the administration's letter of transmittal, the 
bill, and a section-by-section analysis of the legislation be printed 
in the Record for the information of my colleagues.
  There being no objection, the items were ordered to be printed in the 
Record, as follows:

                                S. 2006

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,
       That section 9(c) of the Act to establish the Keweenaw 
     National Historical Park (Public Law 102-543, approved 
     October 27, 1992), is amended as follows:
       (1) In paragraph (A), by striking ``from nominees'' and 
     inserting ``after consideration of nominees''.
       (2) In paragraph (B), by striking ``from nominees'' and 
     inserting ``after consideration of nominees''.
       (3) In paragraph (C), by striking ``from nominees'' and 
     inserting ``after consideration of nominees''.
       (4) In paragraph (D), by striking ``from nominees'' and 
     inserting ``after consideration of nominees''.
                                  ____


    Section-by-Section Analysis--Keweenaw National Historical Park 
                               Amendments

       This bill would amend the enabling legislation for the 
     Keweenaw National Historical Park in Michigan to correct the 
     language of the membership section for the Keweenaw National 
     Historical Park Advisory Commission. The new language will 
     alleviate constitutional concerns about the appointment 
     process for the commission.
                                  ____

                                  U.S. Department of the Interior,


                                      Office of the Secretary,

                                Washington, DC, February 23, 1998.
     Hon. Albert Gore, Jr.,
     President of the Senate,
     Washington, DC.
       Dear Mr. President: Enclosed is a draft bill, ``To amend 
     the Act establishing the Keweenaw National Historical Park, 
     and for other purposes.''
       We recommend the bill be introduced, referred to the 
     appropriate committee for consideration, and enacted.
       This bill will facilitate the appointment of the Keweenaw 
     National Historical Park Advisory Commission for this 
     Michigan park. The existing statute raises constitutional 
     concerns by directing the Secretary of the Interior to 
     appoint to the Commission persons nominated by state and 
     local officials. The Department of Justice has opined that 
     this procedure does not satisfy the requirements imposed by 
     the Appointments Clause (U.S. Const. Art. II, Sec. 2, cl. 2) 
     for appointments of federal officers. Accordingly, former 
     President Bush signed the existing law on the express 
     understanding that the commission would serve only in an 
     advisory capacity and would not exercise executive authority. 
     The proposed amendments will eliminate the need for this 
     limiting construction of the commission's duties.
       The Office of Management and Budget has advised that there 
     is no objection to the enactment of the enclosed draft 
     legislation from the standpoint of the Administration's 
     program.
           Sincerely,

                                                 Donald Barry,

                                    Acting Assistant Secretary for
                                      Fish and Wildlife and Parks.
       Enclosures.
                                 ______
                                 
      By Mr. COCHRAN (for himself and Mr. Hollings):
  S. 2007. A bill to amend the false claims provisions of chapter 37 of 
title 31, United States Code; to the Committee on the Judiciary.


                  the health care claims guidance act

  Mr. COCHRAN. Mr. President, today I am introducing the Health Care 
Claims Guidance Act. I am pleased to have the distinguished Senator 
from South Carolina (Mr. Hollings), join with me as an original co-
sponsor of the bill. This measure addresses a very serious concern: the 
government's misuse of the False Claims Act and the need to distinguish 
Medicare fraud from unavoidable billing errors.
  Health care fraud has no place in health care practice. Health care 
fraud costs taxpayers many millions of dollars that should be spent on 
patient care. In addition, government agencies must be able to use all 
of the tools at their disposal to prosecute aggressively those who 
willfully engage in fraudulent practices.
  It is equally important, however, that government resources be used 
to go after genuine wrongdoers, rather than health care providers who 
may have overbilled the government for Medicare services through 
innocent clerical errors or interpretive mistakes.
  Recently, the Department of Justice has embarked on a program to 
utilize the False Claims Act to prosecute provider billing errors. 
Until 1994, government agencies, hospitals, and physicians acted 
together, cooperating in most instances, to make sure all parties were 
treated fairly in Medicare billing disputes. Sometimes providers were 
underpaid, sometimes they were overpaid. Either way, they and the 
government would review and settle claims at the end of each quarter or 
each year. But, the government has abandoned this practice with doctors 
and hospitals and has begun a campaign to coerce and extract money 
improperly from the providers.
  In the State of Mississippi, and across the Nation, health car 
providers have received ``demand'' letters from U.S. Attorneys' 
offices, many not even from their own State, asserting that the doctors 
and hospitals may be guilty of fraudulent billing. These letters 
threaten the imposition of treble damages plus fines of $5,000 to 
$10,000 per claim unless a quick settlement is reached, often within 
fourteen days of the letter. In some cases, the demand letters have 
been sent based on alleged overbilling of minuscule amounts.
  Providers should certainly do all they can to minimize errors, and 
when discrepancies are discovered, the correct amounts should be paid 
to the Government with interest.
  But, with the filing of large numbers of claims each year, and the 
volume of Government rules, regulations, and directives--some of which 
are conflicting--that providers must follow, it is impossible to be 
error-free. Hospitals and health systems submit nearly 200,000 Medicare 
claims a day. To ensure the accuracy of those claims, they must comply 
with the 1,800 pages of law, 1,300 pages of regulations interpreting 
the law and thousands of additional pages of instructions. In addition, 
they are required to work with 41 intermediaries--mostly insurance 
companies--that have their own procedures that hospitals must follow as 
part of the billing process. The same level of law, procedures, and 
instructions also apply to physicians.
  The current practice of the Department of Justice, using the False 
Claims Act, assumes that hospitals, health systems, and doctors are 
guilty of intentionally filing erroneous claims when errors are made. 
This, in my view, is simply not right.
  The Health Care Claims Guidance Act we are introducing would amend 
the False Claims Act to distinguish between fraud and mere mistakes. It 
would apply only to claims under federally funded health care programs, 
and would have no effect on other False Claims Act prosecutions.
  The legislation does not change the criminal portions of the False 
Claims Act. Neither does it change the qui tam, or ``whistle blower'' 
provisions of the law. And it in no way would impede the Department of 
Justice or any other Government agency from zeroing in on true fraud 
and prosecuting those who commit fraud. No other Federal laws would be 
affected, including changes made by Congress in 1996 in the Health

[[Page S3790]]

Insurance Portability and Accountability Act. The changes would apply 
only to health care claims for Federally funded programs such as 
Medicare and CHAMPUS. This legislation would not prevent the Government 
from receiving any money that is rightfully due. In all cases, 
overpayments would be reimbursed with interest.

  What this legislation does is to distinguish Medicare billing fraud 
from honest billing mistakes. The bill does these four things:
  It imposes a ``de minimis'' standard. Under the standard, as defined 
by the American Institute of Certified Public Accountants, Medicare 
overpayments to providers of less than a specified percentage would 
result in penalties of no more than the amount of the claim plus 
interest.
  It establishes a ``safe harbor'' for health care providers that 
submit a claim based on advice given by fiscal intermediaries and 
carriers. Such hospitals would be subject to fines limited to actual 
damages and interest, not treble damages plus $5,000 to $10,000 per 
claim.
  It raises the burden of proof required under the act from a 
``preponderance of the evidence'' standard to a ``clear and convincing 
evidence'' standard.
  And lastly, it establishes a ``safe harbor'' for health care 
providers that have adopted effective, good-faith compliance plans in 
which they are, if found to be in violation of the False Claims Act, 
subject only to actual damages plus interest, rather than treble 
damages plus $5,000 to $10,000 per claim.
  Mr. President, although Congress 2 years ago gave Federal agencies 
additional tools to go after health care fraud--such as expanded 
authority under the Health Insurance Portability and Accountability 
Act--the Department of Justice has nonetheless decided that the use of 
the False Claims Act guarantees ``easy money.''
  The Health Care Claims Guidance Act stops this abuse of the law and 
provides a clear and simple way of distinguishing between those claims 
that are fraudulent and those claims that result from human error. I 
urge Senators to support this bill.
  I ask unanimous consent that a copy 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. 2007

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Health Care Claims Guidance 
     Act''.

     SEC. 2. RULES FOR ACTIONS UNDER FALSE CLAIMS PROVISIONS BASED 
                   ON CLAIMS SUBMITTED UNDER CERTAIN HEALTH CARE 
                   PROGRAMS.

       (a) In General.--Subchapter III of chapter 37 of title 31, 
     United States Code, is amended by adding at the end the 
     following:

     ``Sec. 3734. Rules for certain actions based on health care 
       claims

       ``(a) In General.--In the case of any action that is 
     brought under this subchapter based on a claim submitted with 
     respect to a federally funded health care program, the 
     preceding provisions of this subchapter shall apply only to 
     the extent that such provisions are consistent with the 
     provisions of this section.
       ``(b) Actions if Amount of Damages Are Material Amount.--
     Notwithstanding the preceding sections of this subchapter, no 
     action may be brought under this subchapter based on a claim 
     that is submitted under a federally funded health care 
     program unless the amount of damages alleged to have been 
     sustained by the United States Government with respect to 
     such claim is a material amount.
       ``(c) Actions for Claims Submitted in Reliance on Official 
     Guidance.--Notwithstanding the preceding sections of this 
     subchapter, no action may be brought under this subchapter 
     based on a claim submitted--
       ``(1) in reliance on (and correctly using) erroneous 
     information supplied by a Federal agency (or an agent 
     thereof) about matters of fact at issue; or
       ``(2) in reliance on (and correctly applying) written 
     statements of Federal policy which affects such claim 
     provided by a Federal agency (or an agent thereof).
       ``(d) Action for Claims Submitted by Persons in Substantial 
     Compliance With Model Compliance Plan.--Notwithstanding the 
     preceding sections of this subchapter, no action may be 
     brought under this subchapter based on a claim submitted by a 
     person that is in substantial compliance with a model 
     compliance plan issued by the Secretary of Health and Human 
     Services (in consultation with the Secretary of Defense).
       ``(e) Standard of Proof.--In any action brought under this 
     subchapter with respect to a claim submitted to a federally 
     funded health care program, section 3731(c) shall be applied 
     by substituting `clear and convincing evidence' for `a 
     preponderance of the evidence'.
       ``(f) Rule of Construction.--Nothing in this section shall 
     be construed as limiting the authority of the Government of 
     the United States to recoup or otherwise recover damages with 
     respect to a claim submitted to a federally funded health 
     care program under provisions of law other than this 
     subchapter.
       ``(g) Definitions; Related Rules.--For purposes of this 
     section--
       ``(1) the term `claim' means a claim (as defined in section 
     3729(c)) made with respect to a federally funded health care 
     program;
       ``(2) the term `damages' means the amount of any 
     overpayment made by the United States Government with respect 
     to a claim;
       ``(3) the term `federally funded health care program' means 
     a program that provides health benefits, whether directly, 
     through the purchase of insurance, or otherwise, that is 
     established under--
       ``(A) title XVIII, XIX, or XXI of the Social Security Act, 
     or
       ``(B) title 10, United States Code;
       ``(4) the amount of damages alleged to have been sustained 
     by the United States Government with respect to a claim 
     submitted by (or on behalf of) a person shall be treated as a 
     `material amount' only if such amount exceeds a proportion 
     (specified in regulations promulgated by the Secretary of 
     Health and Human Services in consultation with the Secretary 
     of Defense) of the total of the amounts for which claims were 
     submitted by (or on behalf of) such person--
       ``(A) to the same federally funded health care program, and
       ``(B) for the same calendar year,
     as the claim upon which an action under this subchapter is 
     based;
       ``(5) the regulations specifying the proportion referred to 
     in paragraph (4) shall be based on the definition of the term 
     `material' used by the American Institute of Certified Public 
     Accountants as of the date of the enactment of this section; 
     and
       ``(6) in determining whether an amount of damages is a 
     `material amount' under paragraph (4), with respect to a 
     person--
       ``(A) the amount of damages for more than 1 claim may be 
     aggregated only if the acts or omissions resulting in such 
     damages were part of a pattern of related acts or omissions 
     by such person, and
       ``(B) if damages for more than 1 claim are aggregated in 
     accordance with subparagraph (A), the proportion referred to 
     in such paragraph shall be determined by comparing the amount 
     of such aggregate damages to the total of the amounts for 
     which claims were submitted by (or on behalf of) such person 
     to the same federally funded health care program for each of 
     the calendar years for which any claim upon which such 
     aggregate damages were based was submitted.''.
       (b) Technical and Conforming Amendment.--The table of 
     sections for chapter 37 of title 31, United States Code, is 
     amended by adding after the item relating to section 3733 the 
     following:

``3734. Rules for certain actions based on health care claims.''.

       (c) Effective Date.--The amendment made by subsection (a) 
     shall apply to actions brought under subchapter III of 
     chapter 37 of title 31, United States Code, with respect to 
     claims submitted before, on, and after the date of the 
     enactment of this Act.

  Mr. HOLLINGS. Mr. President, I am delighted to join my colleague 
Senator Cochran in introducing legislation that helps define the rules 
of the game for health care providers and allows investigators to focus 
on ferreting out and prosecuting real fraud in Federal health programs.
  The Health Care Claims Guidance Act of 1998 that we introduce today 
is made necessary by conflicting, extremely complex regulations 
covering Medicare, Medicaid, CHAMPS and other Federally funded 
programs. Ironically, most of these exist as a result of Congressional 
efforts to reduce fraud and abuse--to establish a system for billing 
and claims processing that assures these programs are paying reasonable 
costs for medically necessary services actually provided to eligible 
individuals. Not achieving our goal of ending fraud, we just stack on 
more rules that require honest providers to take more and more time 
from patient care to do paperwork while the crooks ignore us or accept 
as a challenge getting around the rules. There is no end in sight. This 
is a classic example of the road to hell being paved with good 
intentions. We have created a nightmare, and we have a responsibility 
to begin straightening out some of the confusion so honest health care 
providers can take care of patients and we can concentrate on 
prosecuting those who willfully violate the law.
  It is absolutely imperative that we accept nothing less than zero 
tolerance for real fraud and that the Government use all the tools at 
its disposal to prosecute willful violations of the law. It is equally 
imperative that we play fair with our partners who provide the health 
care we pay for with Federal

[[Page S3791]]

funds. When a participating hospital receives directions from its 
fiscal intermediary, the hospital should know it can follow those 
directions without fear of being accused of fraud. Using the False 
Claims Act, the Justice Department is notifying hospitals that they are 
under investigation for alleged billing fraud, offering minimal time to 
respond or face prosecution. Hospitals are capitulating to these 
demands even when they know no fraud has been committed simply because 
they cannot afford to pay the accountants and lawyers to take on the 
Department of Justice. Others believe diverting these funds from 
patient care would be an irresponsible waste of tax dollars and not in 
the best interests of Medicare beneficiaries. I certainly agree.
  Respected physicians in my State, some personal friends of forty 
years, have received letters recently from the ``Medicare Fraud Unit'' 
demanding that they pay up immediately or face prosecution. They are 
confused and annoyed about the complexity of Medicare rules and coding, 
but they are outraged that they are being accused of fraud with no 
basis whatsoever. I submit, Mr. President, that they deserve to be 
enraged. And it doesn't get any better once they enter negotiations and 
are virtually unable to practice medicine because of the auditors 
consume most of the work day and office space. Then they wait for 
months to see if the ax will fall.
  The Health Care Claims Guidance Act of 1998 would take a small but 
important step in the right direction. It would amend the False Claims 
Act to create special rules for claims in all Federally funded health 
care programs. No criminal provisions are amended. The bill's 
provisions apply only to health care claims limited to civil actions.
  First, no action can be brought if the provider has relied on and 
correctly applied information supplied by a Federal agency or an agent 
thereof. Second, no action may be brought unless the amount of damages 
is material. Third, it establishes a safe harbor for hospitals with an 
effective compliance plan under the General Hospital Compliance 
Guidelines. And, fourth, it raises the burden of proof from a 
``preponderance of the evidence'' to a ``clear and convincing 
evidence'' standard.
  Mr. President, let me make it clear once again, this bill in no way 
limits the authority of the Government to recoup or otherwise recover 
damages with respect to claims under any other provisions of law and 
does not apply to criminal provisions. It allows us to begin restoring 
the partnership between the Federal Government and those who provide 
health care under Federal programs and encourages the Government to use 
its resources to prosecute those who violate that partnership. I urge 
my colleagues to assist us in its early passage.
                                 ______
                                 
      By Mr. COVERDELL (for himself, Mr. Ashcroft, Mr. Shelby, Mr. 
        Frist, Mr. Hagel, Mr. Inhofe, and Mr. McCain):
  S. 2008. A bill to amend the Internal Revenue Code of 1986 to 
prohibit the use of random audits, and for other purposes; to the 
Committee on Finance.


       the internal revenue service random audit prohibition act

  Mr. COVERDELL. Mr. President, I rise today to introduce the Internal 
Revenue Service Random Audit Prohibition Act. I wanted to take this 
opportunity to alert my colleagues of the Senate that the IRS has 
identified a new enemy: innocent taxpayers.
  Over the past several years, all of us have seen news accounts of 
regular, average citizens who have become the targets of grueling IRS 
audits. These individuals were neither wealthy nor powerful; in fact, 
they were most often ordinary, law-abiding taxpayers who earned a 
modest wage, ran a small business, or operated a family farm. Some 
struggled just to make ends meet, and many were understandably confused 
about what they had committed to justify the scrutiny of the IRS.
  The truth is they committed no wrong. They were simply unfortunate 
victims of an IRS practice called ``random audits,'' where the IRS 
simply picks people out of a hat in the hope it can uncover some 
wrongdoing.
  A recent report produced by the General Accounting Office (GAO) at my 
request confirms that the IRS has been targeting thousands of poor 
taxpayers and small businesses for random audits. In fact, almost 95 
percent of all random audits of individual taxpayers performed between 
1994 and 1996 were conducted on taxpayers who earned less than $25,000 
each year.
  Last Fall, hearings held by the Senate Finance Committee brought the 
IRS's abuse of taxpayers to the attention of the entire Nation. One 
witness, Jennifer Long, who is a current field agent with the IRS, 
remarked, ``As of late, we seem to be auditing only the poor people. 
The current IRS Management does not believe anyone in this country can 
possibly live on less than $20,000 per year, insisting anyone below 
that level must be cheating by understating their true income.'' The 
IRS' belief that low-income families are more likely to cheat than 
others services as a disturbing sign of how far it has strayed from the 
principles of American justice.
  The GAO report also indicates that the IRS has been specifically 
targeting my home state of Georgia for random audits. Nearly twice as 
many random audits took place in Georgia between 1994 and 1996 than in 
all the New England states combined and Georgians are three-times more 
likely to be randomly audited than their California counterparts. 
Furthermore, the GAO warns that we can expect that number of rise 
dramatically in Georgia over the next several years because the IRS 
believes small businesses in Georgia are more likely than other so-
called ``subpopulations'' to engage in tax fraud. I do not understand 
why the IRS believes that Georgia small business are more likely to 
cheat than their counterparts elsewhere in the Nation. I still have not 
received an adequate reply from the IRS regarding any of these 
developments.
  Most of us understand the need to ensure tax code compliance through 
reasonable mechanisms. Where there is some indication that wrongdoing 
has occurred, an audit may be appropriate. But Americans will not 
accept the IRS's assertion that enforcement requires them to go after 
innocent, low-income taxpayers by using random audits that make no 
distinction between the guilty and the innocent. Honest citizens 
deserve better.
  The legislation I introduce today, along with a number of my 
colleagues, would remove random audits as a tool available to the IRS 
in its examination process. Victims of random audits would be entitled 
to damages of $5,000 after filing civil action, and the cost of 
litigation would also be recoverable. In addition, my proposal would 
require the IRS to identify the basis for audit in any notice to the 
affected taxpayer of such an examination. Finally, the effective date 
for these changes are set to the date of introduction. This puts the 
IRS on notice that Congress is deadly serious about the need to end 
random audits.
  I hope my colleagues will support my effort to stop the IRS from 
targeting innocent taxpayers. With passage of the IRS Random Audit 
Prohibition Act, honest, hardworking taxpayers can be assured they will 
be protected from unwarranted audits. They deserve no less.

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