[Congressional Record Volume 144, Number 88 (Tuesday, July 7, 1998)]
[Senate]
[Pages S7584-S7605]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                          AMENDMENTS SUBMITTED

                                 ______
                                 

                  PRODUCT LIABILITY REFORM ACT OF 1998

                                 ______
                                 

                      FEINGOLD AMENDMENT NO. 3061

  (Ordered to lie on the table.)
  Mr. FEINGOLD submitted an amendment intended to be proposed by him to 
the bill (S. 648) to establish legal standards and procedures for 
product liability litigation, and for other purposes; as follows:

       After section 302, add the following:

                TITLE IV--EQUAL ACCESS TO JUSTICE REFORM

     SEC. 401. EQUAL ACCESS TO JUSTICE REFORM.

       (a) Short Title.--This title may be cited as the ``Equal 
     Access to Justice Reform Amendments of 1998''.
       (b) Award of Costs and Fees.--
       (1) Administrative proceedings.--Section 504(a)(2) of title 
     5, United States Code, is amended by inserting after ``(2)'' 
     the following: ``At any time after the commencement of an 
     adversary adjudication covered by this section, the 
     adjudicative officer may ask a party to declare whether such 
     party intends to seek an award of fees and expenses against 
     the agency should such party prevail.''.
       (2) Judicial proceedings.--Section 2412(d)(1)(B) of title 
     28, United States Code, is amended by inserting after ``(B)'' 
     the following: ``At any time after the commencement of an 
     adversary adjudication covered by this section, the court may 
     ask a party to declare whether such party intends to seek an 
     award of fees and expenses against the agency should such 
     party prevail.''.
       (c) Hourly Rate for Attorney Fees.--
       (1) Administrative proceedings.--Section 504(b)(1)(A)(ii) 
     of title 5, United States Code, is amended by striking all 
     beginning with ``$125 per hour'' and inserting ``$125 per 
     hour unless the agency determines by regulation that an 
     increase in the cost-of-living based on the date of final 
     disposition justifies a higher fee);''.
       (2) Judicial proceedings.--Section 2412(d)(2)(A)(ii) of 
     title 28, United States Code, is amended by striking all 
     beginning with ``$125 per hour'' and inserting ``$125 per 
     hour unless the court determines that an increase in the 
     cost-of-living based on the date of final disposition 
     justifies a higher fee);''.
       (d) Payment From Agency Appropriations.--
       (1) Administrative proceedings.--Section 504(d) of title 5, 
     United States Code, is amended by adding at the end the 
     following: ``Fees and expenses awarded under this subsection 
     may not be paid from the claims and judgments account of the 
     Treasury from funds appropriated pursuant to section 1304 of 
     title 31.''.

[[Page S7585]]

       (2) Judicial proceedings.--Section 2412(d)(4) of title 28, 
     United States Code, is amended by adding at the end the 
     following: ``Fees and expenses awarded under this subsection 
     may not be paid from the claims and judgments account of the 
     Treasury from funds appropriated pursuant to section 1304 of 
     title 31.''.
       (e) Offers of Settlement.--
       (1) Administrative proceedings.--Section 504 of title 5, 
     United States Code, is amended--
       (A) by redesignating subsections (e) and (f) as subsections 
     (f) and (g), respectively; and
       (B) by inserting after subsection (d) the following new 
     subsection:
       ``(e)(1) At any time after the filing of an application for 
     fees and other expenses under this section, an agency from 
     which a fee award is sought may serve upon the applicant an 
     offer of settlement of the claims made in the application. If 
     within 10 days after service of the offer the applicant 
     serves written notice that the offer is accepted, either 
     party may then file the offer and notice of acceptance 
     together with proof of service thereof.
       ``(2) An offer not accepted shall be deemed withdrawn. The 
     fact that an offer is made but not accepted shall not 
     preclude a subsequent offer. If any award of fees and 
     expenses for the merits of the proceeding finally obtained by 
     the applicant is not more favorable than the offer, the 
     applicant shall not be entitled to receive an award for 
     attorneys' fees or other expenses incurred in relation to the 
     application for fees and expenses after the date of the 
     offer.''.
       (2) Judicial proceedings.--Section 2412 of title 28, United 
     States Code, is amended--
       (A) by redesignating subsections (e) and (f) as subsections 
     (f) and (g), respectively; and
       (B) by inserting after subsection (d) the following new 
     subsection:
       ``(e)(1) At any time after the filing of an application for 
     fees and other expenses under this section, an agency of the 
     United States from which a fee award is sought may serve 
     upon the applicant an offer of settlement of the claims 
     made in the application. If within 10 days after service 
     of the offer the applicant serves written notice that the 
     offer is accepted, either party may then file the offer 
     and notice of acceptance together with proof of service 
     thereof.
       ``(2) An offer not accepted shall be deemed withdrawn. The 
     fact that an offer is made but not accepted shall not 
     preclude a subsequent offer. If any award of fees and 
     expenses for the merits of the proceeding finally obtained by 
     the applicant is not more favorable than the offer, the 
     applicant shall not be entitled to receive an award for 
     attorneys' fees or other expenses incurred in relation to the 
     application for fees and expenses after the date of the 
     offer.''.
       (f) Elimination of Substantial Justification Standard.--
       (1) Administrative proceedings.--Section 504 of title 5, 
     United States Code, is amended--
       (A) in subsection (a)(1), by striking all beginning with 
     ``, unless the adjudicative officer'' through ``expenses are 
     sought''; and
       (B) in subsection (a)(2), by striking ``The party shall 
     also allege that the position of the agency was not 
     substantially justified.''.
       (2) Judicial proceedings.--Section 2412(d) of title 28, 
     United States Code, is amended--
       (A) in paragraph (1)(A), by striking ``, unless the court 
     finds that the position of the United States was 
     substantially justified or that special circumstances make an 
     award unjust'';
       (B) in paragraph (1)(B), by striking ``The party shall also 
     allege that the position of the United States was not 
     substantially justified. Whether or not the position of the 
     United States was substantially justified shall be determined 
     on the basis of the record (including the record with respect 
     to the action or failure to act by the agency upon which the 
     civil action is based) which is made in the civil action for 
     which fees and other expenses are sought.''; and
       (C) in paragraph (3), by striking ``, unless the court 
     finds that during such adversary adjudication the position of 
     the United States was substantially justified, or that 
     special circumstances make an award unjust''.
       (g) Reports to Congress.--
       (1) Administrative proceedings.--No later than 180 days 
     after the date of the enactment of this Act, the 
     Administrative Conference of the United States shall submit a 
     report to Congress--
       (A) providing an analysis of the variations in the 
     frequency of fee awards paid by specific Federal agencies 
     under the provisions of section 504 of title 5, United States 
     Code; and
       (B) including recommendations for extending the application 
     of such sections to other Federal agencies and administrative 
     proceedings.
       (2) Judicial proceedings.--No later than 180 days after the 
     date of the enactment of this Act, the Department of Justice 
     shall submit a report to Congress--
       (A) providing an analysis of the variations in the 
     frequency of fee awards paid by specific Federal districts 
     under the provisions of section 2412 of title 28, United 
     States Code; and
       (B) including recommendations for extending the application 
     of such sections to other Federal judicial proceedings.
       (h) Effective Date.--The provisions of this title and the 
     amendments made by this title shall take effect 30 days after 
     the date of the enactment of this Act and shall apply only to 
     an administrative complaint filed with a Federal agency or a 
     civil action filed in a United States court on or after such 
     date.
                                 ______
                                 

DEPARTMENTS OF VETERANS AFFAIRS AND HOUSING AND URBAN DEVELOPMENT, AND 
             INDEPENDENT AGENCIES APPROPRIATIONS ACT, 1999

                                 ______
                                 

                BUMPERS (AND OTHERS) AMENDMENT NO. 3062

  Mr. BUMPERS (for himself, Mr. Bryan, Mr. Wellstone, Mrs. Hutchison, 
Mr. Leahy, Mr. Kohl, Mr. Wyden, Mr. Feingold, Mr. Durbin, and Mr. 
Hutchinson) proposed an amendment to the bill (S. 2168) making 
appropriations for the Departments of Veterans Affairs and Housing and 
Urban Development, and for sundry independent agencies, commissions, 
corporations, and offices for the fiscal year ending September 30, 
1999, and for other purposes; as follows:

       Strike line 21 on page 76 through line 4 on page 77 and 
     insert the following:
       ``For termination of the International Space Station 
     project, $850,000,000. In addition to the other provisions of 
     this Act, $1,000,000,000 shall be available for the Veterans 
     Health Administration Medical Care account and $450,000,000 
     shall be available for the Housing Certificate Fund account 
     within the Department of Housing and Urban Development's 
     budget.''
                                 ______
                                 

                       DASCHLE AMENDMENT NO. 3063

  Mr. DASCHLE proposed an amendment to the bill, S. 2168, supra; as 
follows:

       At the appropriate place, insert the following:
                   TITLE __--PATIENTS' BILL OF RIGHTS

     SEC. __001. SHORT TITLE.

       This title may be cited as the ``Patients' Bill of Rights 
     Act of 1998''.
              Subtitle A--Health Insurance Bill of Rights

                       CHAPTER 1--ACCESS TO CARE

     SEC. __101. ACCESS TO EMERGENCY CARE.

       (a) Coverage of Emergency Services.--
       (1) In general.--If a group health plan, or health 
     insurance coverage offered by a health insurance issuer, 
     provides any benefits with respect to emergency services (as 
     defined in paragraph (2)(B)), the plan or issuer shall cover 
     emergency services furnished under the plan or coverage--
       (A) without the need for any prior authorization 
     determination;
       (B) whether or not the health care provider furnishing such 
     services is a participating provider with respect to such 
     services;
       (C) in a manner so that, if such services are provided to a 
     participant, beneficiary, or enrollee by a nonparticipating 
     health care provider--
       (i) the participant, beneficiary, or enrollee is not liable 
     for amounts that exceed the amounts of liability that would 
     be incurred if the services were provided by a participating 
     health care provider, and
       (ii) the plan or issuer pays an amount that is not less 
     than the amount paid to a participating health care provider 
     for the same services; and
       (D) without regard to any other term or condition of such 
     coverage (other than exclusion or coordination of benefits, 
     or an affiliation or waiting period, permitted under section 
     2701 of the Public Health Service Act, section 701 of the 
     Employee Retirement Income Security Act of 1974, or section 
     9801 of the Internal Revenue Code of 1986, and other than 
     applicable cost-sharing).
       (2) Definitions.--In this section:
       (A) Emergency medical condition based on prudent layperson 
     standard.--The term ``emergency medical condition'' means a 
     medical condition manifesting itself by acute symptoms of 
     sufficient severity (including severe pain) such that a 
     prudent layperson, who possesses an average knowledge of 
     health and medicine, could reasonably expect the absence of 
     immediate medical attention to result in a condition 
     described in clause (i), (ii), or (iii) of section 
     1867(e)(1)(A) of the Social Security Act.
       (B) Emergency services.--The term ``emergency services'' 
     means--
       (i) a medical screening examination (as required under 
     section 1867 of the Social Security Act) that is within the 
     capability of the emergency department of a hospital, 
     including ancillary services routinely available to the 
     emergency department to evaluate an emergency medical 
     condition (as defined in subparagraph (A)), and
       (ii) within the capabilities of the staff and facilities 
     available at the hospital, such further medical examination 
     and treatment as are required under section 1867 of such Act 
     to stabilize the patient.
       (b) Reimbursement for Maintenance Care and Post-
     Stabilization Care.--In the case of services (other than 
     emergency services) for which benefits are available under a 
     group health plan, or under health insurance coverage offered 
     by a health insurance issuer, the plan or issuer shall 
     provide for reimbursement with respect to such services 
     provided to a participant, beneficiary, or enrollee other 
     than through a participating

[[Page S7586]]

     health care provider in a manner consistent with subsection 
     (a)(1)(C) if the services are maintenance care or post-
     stabilization care covered under the guidelines established 
     under section 1852(d)(2) of the Social Security Act (relating 
     to promoting efficient and timely coordination of appropriate 
     maintenance and post-stabilization care of an enrollee after 
     an enrollee has been determined to be stable), or, in the 
     absence of guidelines under such section, such guidelines as 
     the Secretary shall establish to carry out this subsection.

     SEC. __102. OFFERING OF CHOICE OF COVERAGE OPTIONS UNDER 
                   GROUP HEALTH PLANS.

       (a) Requirement.--
       (1) Offering of point-of-service coverage option.--Except 
     as provided in paragraph (2), if a group health plan (or 
     health insurance coverage offered by a health insurance 
     issuer in connection with a group health plan) provides 
     benefits only through participating health care providers, 
     the plan or issuer shall offer the participant the option to 
     purchase point-of-service coverage (as defined in subsection 
     (b)) for all such benefits for which coverage is otherwise so 
     limited. Such option shall be made available to the 
     participant at the time of enrollment under the plan or 
     coverage and at such other times as the plan or issuer offers 
     the participant a choice of coverage options.
       (2) Exception.--Paragraph (1) shall not apply with respect 
     to a participant in a group health plan if the plan offers 
     the participant--
       (A) a choice of health insurance coverage through more than 
     one health insurance issuer; or
       (B) two or more coverage options that differ significantly 
     with respect to the use of participating health care 
     providers or the networks of such providers that are used.
       (b) Point-of-Service Coverage Defined.--In this section, 
     the term ``point-of-service coverage'' means, with respect to 
     benefits covered under a group health plan or health 
     insurance issuer, coverage of such benefits when provided by 
     a nonparticipating health care provider. Such coverage need 
     not include coverage of providers that the plan or issuer 
     excludes because of fraud, quality, or similar reasons.
       (c) Construction.--Nothing in this section shall be 
     construed--
       (1) as requiring coverage for benefits for a particular 
     type of health care provider;
       (2) as requiring an employer to pay any costs as a result 
     of this section or to make equal contributions with respect 
     to different health coverage options; or
       (3) as preventing a group health plan or health insurance 
     issuer from imposing higher premiums or cost-sharing on a 
     participant for the exercise of a point-of-service coverage 
     option.
       (d) No Requirement for Guaranteed Availability.--If a 
     health insurance issuer offers health insurance coverage that 
     includes point-of-service coverage with respect to an 
     employer solely in order to meet the requirement of 
     subsection (a), nothing in section 2711(a)(1)(A) of the 
     Public Health Service Act shall be construed as requiring the 
     offering of such coverage with respect to another employer.

     SEC. __103. CHOICE OF PROVIDERS.

       (a) Primary Care.--A group health plan, and a health 
     insurance issuer that offers health insurance coverage, shall 
     permit each participant, beneficiary, and enrollee to receive 
     primary care from any participating primary care provider who 
     is available to accept such individual.
       (b) Specialists.--
       (1) In general.--Subject to paragraph (2), a group health 
     plan and a health insurance issuer that offers health 
     insurance coverage shall permit each participant, 
     beneficiary, or enrollee to receive medically necessary or 
     appropriate specialty care, pursuant to appropriate referral 
     procedures, from any qualified participating health care 
     provider who is available to accept such individual for such 
     care.
       (2) Limitation.--Paragraph (1) shall not apply to specialty 
     care if the plan or issuer clearly informs participants, 
     beneficiaries, and enrollees of the limitations on choice of 
     participating providers with respect to such care.

     SEC. __104. ACCESS TO SPECIALTY CARE.

       (a) Obstetrical and Gynecological Care.--
       (1) In general.--If a group health plan, or a health 
     insurance issuer in connection with the provision of health 
     insurance coverage, requires or provides for a participant, 
     beneficiary, or enrollee to designate a participating primary 
     care provider--
       (A) the plan or issuer shall permit such an individual who 
     is a female to designate a participating physician who 
     specializes in obstetrics and gynecology as the individual's 
     primary care provider; and
       (B) if such an individual has not designated such a 
     provider as a primary care provider, the plan or issuer--
       (i) may not require authorization or a referral by the 
     individual's primary care provider or otherwise for coverage 
     of routine gynecological care (such as preventive women's 
     health examinations) and pregnancy-related services provided 
     by a participating health care professional who specializes 
     in obstetrics and gynecology to the extent such care is 
     otherwise covered, and
       (ii) may treat the ordering of other gynecological care by 
     such a participating physician as the authorization of the 
     primary care provider with respect to such care under the 
     plan or coverage.
       (2) Construction.--Nothing in paragraph (1)(B)(ii) shall 
     waive any requirements of coverage relating to medical 
     necessity or appropriateness with respect to coverage of 
     gynecological care so ordered.
       (b) Specialty Care.--
       (1) Specialty care for covered services.--
       (A) In general.--If--
       (i) an individual is a participant or beneficiary under a 
     group health plan or an enrollee who is covered under health 
     insurance coverage offered by a health insurance issuer,
       (ii) the individual has a condition or disease of 
     sufficient seriousness and complexity to require treatment by 
     a specialist, and
       (iii) benefits for such treatment are provided under the 
     plan or coverage,
     the plan or issuer shall make or provide for a referral to a 
     specialist who is available and accessible to provide the 
     treatment for such condition or disease.
       (B) Specialist defined.--For purposes of this subsection, 
     the term ``specialist'' means, with respect to a condition, a 
     health care practitioner, facility, or center (such as a 
     center of excellence) that has adequate expertise through 
     appropriate training and experience (including, in the case 
     of a child, appropriate pediatric expertise) to provide high 
     quality care in treating the condition.
       (C) Care under referral.--A group health plan or health 
     insurance issuer may require that the care provided to an 
     individual pursuant to such referral under subparagraph (A) 
     be--
       (i) pursuant to a treatment plan, only if the treatment 
     plan is developed by the specialist and approved by the plan 
     or issuer, in consultation with the designated primary care 
     provider or specialist and the individual (or the 
     individual's designee), and
       (ii) in accordance with applicable quality assurance and 
     utilization review standards of the plan or issuer.
     Nothing in this subsection shall be construed as preventing 
     such a treatment plan for an individual from requiring a 
     specialist to provide the primary care provider with regular 
     updates on the specialty care provided, as well as all 
     necessary medical information.
       (D) Referrals to participating providers.--A group health 
     plan or health insurance issuer is not required under 
     subparagraph (A) to provide for a referral to a specialist 
     that is not a participating provider, unless the plan or 
     issuer does not have an appropriate specialist that is 
     available and accessible to treat the individual's condition 
     and that is a participating provider with respect to such 
     treatment.
       (E) Treatment of nonparticipating providers.--If a plan or 
     issuer refers an individual to a nonparticipating specialist 
     pursuant to subparagraph (A), services provided pursuant to 
     the approved treatment plan (if any) shall be provided at no 
     additional cost to the individual beyond what the individual 
     would otherwise pay for services received by such a 
     specialist that is a participating provider.
       (2) Specialists as primary care providers.--
       (A) In general.--A group health plan, or a health insurance 
     issuer, in connection with the provision of health insurance 
     coverage, shall have a procedure by which an individual who 
     is a participant, beneficiary, or enrollee and who has an 
     ongoing special condition (as defined in subparagraph (C)) 
     may receive a referral to a specialist for such condition who 
     shall be responsible for and capable of providing and 
     coordinating the individual's primary and specialty care. If 
     such an individual's care would most appropriately be 
     coordinated by such a specialist, such plan or issuer shall 
     refer the individual to such specialist.
       (B) Treatment as primary care provider.--Such specialist 
     shall be permitted to treat the individual without a referral 
     from the individual's primary care provider and may authorize 
     such referrals, procedures, tests, and other medical services 
     as the individual's primary care provider would otherwise be 
     permitted to provide or authorize, subject to the terms of 
     the treatment plan (referred to in paragraph (1)(C)(i)).
       (C) Ongoing special condition defined.--In this paragraph, 
     the term ``special condition'' means a condition or disease 
     that--
       (i) is life-threatening, degenerative, or disabling, and
       (ii) requires specialized medical care over a prolonged 
     period of time.
       (D) Terms of referral.--The provisions of subparagraphs (C) 
     through (E) of paragraph (1) apply with respect to referrals 
     under subparagraph (A) of this paragraph in the same manner 
     as they apply to referrals under paragraph (1)(A).
       (3) Standing referrals.--
       (A) In general.--A group health plan, and a health 
     insurance issuer in connection with the provision of health 
     insurance coverage, shall have a procedure by which an 
     individual who is a participant, beneficiary, or enrollee and 
     who has a condition that requires ongoing care from a 
     specialist may receive a standing referral to such specialist 
     for treatment of such condition. If the plan or issuer, or if 
     the primary care provider in consultation with the medical 
     director of the plan or issuer and the specialist (if any), 
     determines that such a standing referral is appropriate, the 
     plan or issuer shall make such a referral to such a 
     specialist.
       (B) Terms of referral.--The provisions of subparagraphs (C) 
     through (E) of paragraph (1) apply with respect to referrals 
     under subparagraph (A) of this paragraph in the same

[[Page S7587]]

     manner as they apply to referrals under paragraph (1)(A).

     SEC. __105. CONTINUITY OF CARE.

       (a) In General.--
       (1) Termination of provider.--If a contract between a group 
     health plan, or a health insurance issuer in connection with 
     the provision of health insurance coverage, and a health care 
     provider is terminated (as defined in paragraph (3)), or 
     benefits or coverage provided by a health care provider are 
     terminated because of a change in the terms of provider 
     participation in a group health plan, and an individual who 
     is a participant, beneficiary, or enrollee in the plan or 
     coverage is undergoing a course of treatment from the 
     provider at the time of such termination, the plan or issuer 
     shall--
       (A) notify the individual on a timely basis of such 
     termination, and
       (B) subject to subsection (c), permit the individual to 
     continue or be covered with respect to the course of 
     treatment with the provider during a transitional period 
     (provided under subsection (b)).
       (2) Treatment of termination of contract with health 
     insurance issuer.--If a contract for the provision of health 
     insurance coverage between a group health plan and a health 
     insurance issuer is terminated and, as a result of such 
     termination, coverage of services of a health care provider 
     is terminated with respect to an individual, the provisions 
     of paragraph (1) (and the succeeding provisions of this 
     section) shall apply under the plan in the same manner as if 
     there had been a contract between the plan and the provider 
     that had been terminated, but only with respect to benefits 
     that are covered under the plan after the contract 
     termination.
       (3) Termination.--In this section, the term ``terminated'' 
     includes, with respect to a contract, the expiration or 
     nonrenewal of the contract, but does not include a 
     termination of the contract by the plan or issuer for failure 
     to meet applicable quality standards or for fraud.
       (b) Transitional Period.--
       (1) In general.--Except as provided in paragraphs (2) 
     through (4), the transitional period under this subsection 
     shall extend for at least 90 days from the date of the notice 
     described in subsection (a)(1)(A) of the provider's 
     termination.
       (2) Institutional care.--The transitional period under this 
     subsection for institutional or inpatient care from a 
     provider shall extend until the discharge or termination of 
     the period of institutionalization and also shall include 
     institutional care provided within a reasonable time of the 
     date of termination of the provider status if the care was 
     scheduled before the date of the announcement of the 
     termination of the provider status under subsection (a)(1)(A) 
     or if the individual on such date was on an established 
     waiting list or otherwise scheduled to have such care.
       (3) Pregnancy.--If--
       (A) a participant, beneficiary, or enrollee has entered the 
     second trimester of pregnancy at the time of a provider's 
     termination of participation, and
       (B) the provider was treating the pregnancy before date of 
     the termination,
     the transitional period under this subsection with respect to 
     provider's treatment of the pregnancy shall extend through 
     the provision of post-partum care directly related to the 
     delivery.
       (4) Terminal illness.--If--
       (A) a participant, beneficiary, or enrollee was determined 
     to be terminally ill (as determined under section 
     1861(dd)(3)(A) of the Social Security Act) at the time of a 
     provider's termination of participation, and
       (B) the provider was treating the terminal illness before 
     the date of termination,
     the transitional period under this subsection shall extend 
     for the remainder of the individual's life for care directly 
     related to the treatment of the terminal illness.
       (c) Permissible Terms and Conditions.--A group health plan 
     or health insurance issuer may condition coverage of 
     continued treatment by a provider under subsection (a)(1)(B) 
     upon the provider agreeing to the following terms and 
     conditions:
       (1) The provider agrees to accept reimbursement from the 
     plan or issuer and individual involved (with respect to cost-
     sharing) at the rates applicable prior to the start of the 
     transitional period as payment in full (or, in the case 
     described in subsection (a)(2), at the rates applicable under 
     the replacement plan or issuer after the date of the 
     termination of the contract with the health insurance issuer) 
     and not to impose cost-sharing with respect to the individual 
     in an amount that would exceed the cost-sharing that could 
     have been imposed if the contract referred to in subsection 
     (a)(1) had not been terminated.
       (2) The provider agrees to adhere to the quality assurance 
     standards of the plan or issuer responsible for payment under 
     paragraph (1) and to provide to such plan or issuer necessary 
     medical information related to the care provided.
       (3) The provider agrees otherwise to adhere to such plan's 
     or issuer's policies and procedures, including procedures 
     regarding referrals and obtaining prior authorization and 
     providing services pursuant to a treatment plan (if any) 
     approved by the plan or issuer.
       (d) Construction.--Nothing in this section shall be 
     construed to require the coverage of benefits which would not 
     have been covered if the provider involved remained a 
     participating provider.

     SEC. __106. COVERAGE FOR INDIVIDUALS PARTICIPATING IN 
                   APPROVED CLINICAL TRIALS.

       (a) Coverage.--
       (1) In general.--If a group health plan, or health 
     insurance issuer that is providing health insurance coverage, 
     provides coverage to a qualified individual (as defined in 
     subsection (b)), the plan or issuer--
       (A) may not deny the individual participation in the 
     clinical trial referred to in subsection (b)(2);
       (B) subject to subsection (c), may not deny (or limit or 
     impose additional conditions on) the coverage of routine 
     patient costs for items and services furnished in connection 
     with participation in the trial; and
       (C) may not discriminate against the individual on the 
     basis of the enrollee's participation in such trial.
       (2) Exclusion of certain costs.--For purposes of paragraph 
     (1)(B), routine patient costs do not include the cost of the 
     tests or measurements conducted primarily for the purpose of 
     the clinical trial involved.
       (3) Use of in-network providers.--If one or more 
     participating providers is participating in a clinical trial, 
     nothing in paragraph (1) shall be construed as preventing 
     a plan or issuer from requiring that a qualified 
     individual participate in the trial through such a 
     participating provider if the provider will accept the 
     individual as a participant in the trial.
       (b) Qualified Individual Defined.--For purposes of 
     subsection (a), the term ``qualified individual'' means an 
     individual who is a participant or beneficiary in a group 
     health plan, or who is an enrollee under health insurance 
     coverage, and who meets the following conditions:
       (1)(A) The individual has a life-threatening or serious 
     illness for which no standard treatment is effective.
       (B) The individual is eligible to participate in an 
     approved clinical trial according to the trial protocol with 
     respect to treatment of such illness.
       (C) The individual's participation in the trial offers 
     meaningful potential for significant clinical benefit for the 
     individual.
       (2) Either--
       (A) the referring physician is a participating health care 
     professional and has concluded that the individual's 
     participation in such trial would be appropriate based upon 
     the individual meeting the conditions described in paragraph 
     (1); or
       (B) the participant, beneficiary, or enrollee provides 
     medical and scientific information establishing that the 
     individual's participation in such trial would be appropriate 
     based upon the individual meeting the conditions described in 
     paragraph (1).
       (c) Payment.--
       (1) In general.--Under this section a group health plan or 
     health insurance issuer shall provide for payment for routine 
     patient costs described in subsection (a)(2) but is not 
     required to pay for costs of items and services that are 
     reasonably expected (as determined by the Secretary) to be 
     paid for by the sponsors of an approved clinical trial.
       (2) Payment rate.--In the case of covered items and 
     services provided by--
       (A) a participating provider, the payment rate shall be at 
     the agreed upon rate, or
       (B) a nonparticipating provider, the payment rate shall be 
     at the rate the plan or issuer would normally pay for 
     comparable services under subparagraph (A).
       (d) Approved Clinical Trial Defined.--
       (1) In general.--In this section, the term ``approved 
     clinical trial'' means a clinical research study or clinical 
     investigation approved and funded (which may include funding 
     through in-kind contributions) by one or more of the 
     following:
       (A) The National Institutes of Health.
       (B) A cooperative group or center of the National 
     Institutes of Health.
       (C) Either of the following if the conditions described in 
     paragraph (2) are met:
       (i) The Department of Veterans Affairs.
       (ii) The Department of Defense.
       (2) Conditions for departments.--The conditions described 
     in this paragraph, for a study or investigation conducted by 
     a Department, are that the study or investigation has been 
     reviewed and approved through a system of peer review that 
     the Secretary determines--
       (A) to be comparable to the system of peer review of 
     studies and investigations used by the National Institutes of 
     Health, and
       (B) assures unbiased review of the highest scientific 
     standards by qualified individuals who have no interest in 
     the outcome of the review.
       (e) Construction.--Nothing in this section shall be 
     construed to limit a plan's or issuer's coverage with respect 
     to clinical trials.

     SEC. __107. ACCESS TO NEEDED PRESCRIPTION DRUGS.

       (a) In General.--If a group health plan, or health 
     insurance issuer that offers health insurance coverage, 
     provides benefits with respect to prescription drugs but the 
     coverage limits such benefits to drugs included in a 
     formulary, the plan or issuer shall--
       (1) ensure participation of participating physicians and 
     pharmacists in the development of the formulary;
       (2) disclose to providers and, disclose upon request under 
     section __121(c)(6) to participants, beneficiaries, and 
     enrollees, the nature of the formulary restrictions; and
       (3) consistent with the standards for a utilization review 
     program under section

[[Page S7588]]

     __115, provide for exceptions from the formulary limitation 
     when a non-formulary alternative is medically indicated.
       (b) Coverage of Approved Drugs and Medical Devices.--
       (1) In general.--A group health plan (or health insurance 
     coverage offered in connection with such a plan) that 
     provides any coverage of prescription drugs or medical 
     devices shall not deny coverage of such a drug or device on 
     the basis that the use is investigational, if the use--
       (A) in the case of a prescription drug--
       (i) is included in the labeling authorized by the 
     application in effect for the drug pursuant to subsection (b) 
     or (j) of section 505 of the Federal Food, Drug, and Cosmetic 
     Act, without regard to any postmarketing requirements that 
     may apply under such Act; or
       (ii) is included in the labeling authorized by the 
     application in effect for the drug under section 351 of the 
     Public Health Service Act, without regard to any 
     postmarketing requirements that may apply pursuant to such 
     section; or
       (B) in the case of a medical device, is included in the 
     labeling authorized by a regulation under subsection (d) or 
     (3) of section 513 of the Federal Food, Drug, and Cosmetic 
     Act, an order under subsection (f) of such section, or an 
     application approved under section 515 of such Act, without 
     regard to any postmarketing requirements that may apply under 
     such Act.
       (2) Construction.--Nothing in this subsection shall be 
     construed as requiring a group health plan (or health 
     insurance coverage offered in connection with such a plan) to 
     provide any coverage of prescription drugs or medical 
     devices.

     SEC. __108. ADEQUACY OF PROVIDER NETWORK.

       (a) In General.--Each group health plan, and each health 
     insurance issuer offering health insurance coverage, that 
     provides benefits, in whole or in part, through participating 
     health care providers shall have (in relation to the 
     coverage) a sufficient number, distribution, and variety of 
     qualified participating health care providers to ensure that 
     all covered health care services, including specialty 
     services, will be available and accessible in a timely manner 
     to all participants, beneficiaries, and enrollees under the 
     plan or coverage.
       (b) Treatment of Certain Providers.--The qualified health 
     care providers under subsection (a) may include Federally 
     qualified health centers, rural health clinics, migrant 
     health centers, and other essential community providers 
     located in the service area of the plan or issuer and shall 
     include such providers if necessary to meet the standards 
     established to carry out such subsection.

     SEC. __109. NONDISCRIMINATION IN DELIVERY OF SERVICES.

       (a) Application to Delivery of Services.--Subject to 
     subsection (b), a group health plan, and health insurance 
     issuer in relation to health insurance coverage, may not 
     discriminate against a participant, beneficiary, or enrollee 
     in the delivery of health care services consistent with the 
     benefits covered under the plan or coverage or as required by 
     law based on race, color, ethnicity, national origin, 
     religion, sex, age, mental or physical disability, sexual 
     orientation, genetic information, or source of payment.
       (b) Construction.--Nothing in subsection (a) shall be 
     construed as relating to the eligibility to be covered, or 
     the offering (or guaranteeing the offer) of coverage, under a 
     plan or health insurance coverage, the application of any 
     pre-existing condition exclusion consistent with applicable 
     law, or premiums charged under such plan or coverage.

                      CHAPTER 2--QUALITY ASSURANCE

     SEC. __111. INTERNAL QUALITY ASSURANCE PROGRAM.

       (a) Requirement.--A group health plan, and a health 
     insurance issuer that offers health insurance coverage, shall 
     establish and maintain an ongoing, internal quality assurance 
     and continuous quality improvement program that meets the 
     requirements of subsection (b).
       (b) Program Requirements.--The requirements of this 
     subsection for a quality improvement program of a plan or 
     issuer are as follows:
       (1) Administration.--The plan or issuer has a separate 
     identifiable unit with responsibility for administration of 
     the program.
       (2) Written plan.--The plan or issuer has a written plan 
     for the program that is updated annually and that specifies 
     at least the following:
       (A) The activities to be conducted.
       (B) The organizational structure.
       (C) The duties of the medical director.
       (D) Criteria and procedures for the assessment of quality.
       (3) Systematic review.--The program provides for systematic 
     review of the type of health services provided, consistency 
     of services provided with good medical practice, and patient 
     outcomes.
       (4) Quality criteria.--The program--
       (A) uses criteria that are based on performance and patient 
     outcomes where feasible and appropriate;
       (B) includes criteria that are directed specifically at 
     meeting the needs of at-risk populations and covered 
     individuals with chronic conditions or severe illnesses, 
     including gender-specific criteria and pediatric-specific 
     criteria where available and appropriate;
       (C) includes methods for informing covered individuals of 
     the benefit of preventive care and what specific benefits 
     with respect to preventive care are covered under the plan or 
     coverage; and
       (D) makes available to the public a description of the 
     criteria used under subparagraph (A).
       (5) System for reporting.--The program has procedures for 
     reporting of possible quality concerns by providers and 
     enrollees and for remedial actions to correct quality 
     problems, including written procedures for responding to 
     concerns and taking appropriate corrective action.
       (6) Data analysis.--The program provides, using data that 
     include the data collected under section __112, for an 
     analysis of the plan's or issuer's performance on quality 
     measures.
       (7) Drug utilization review.--The program provides for a 
     drug utilization review program in accordance with section 
     __114.
       (c) Deeming.--For purposes of subsection (a), the 
     requirements of--
       (1) subsection (b) (other than paragraph (5)) are deemed to 
     be met with respect to a health insurance issuer that is a 
     qualified health maintenance organization (as defined in 
     section 1310(c) of the Public Health Service Act); or
       (2) subsection (b) are deemed to be met with respect to a 
     health insurance issuer that is accredited by a national 
     accreditation organization that the Secretary certifies as 
     applying, as a condition of certification, standards at least 
     as stringent as those required for a quality improvement 
     program under subsection (b).
       (d) Variation Permitted.--The Secretary may provide for 
     variations in the application of the requirements of this 
     section to group health plans and health insurance issuers 
     based upon differences in the delivery system among such 
     plans and issuers as the Secretary deems appropriate.

     SEC. __112. COLLECTION OF STANDARDIZED DATA.

       (a) In General.--A group health plan and a health insurance 
     issuer that offers health insurance coverage shall collect 
     uniform quality data that include a minimum uniform data set 
     described in subsection (b).
       (b) Minimum Uniform Data Set.--The Secretary shall specify 
     (and may from time to time update) the data required to be 
     included in the minimum uniform data set under subsection (a) 
     and the standard format for such data. Such data shall 
     include at least--
       (1) aggregate utilization data;
       (2) data on the demographic characteristics of 
     participants, beneficiaries, and enrollees;
       (3) data on disease-specific and age-specific mortality 
     rates and (to the extent feasible) morbidity rates of such 
     individuals;
       (4) data on satisfaction of such individuals, including 
     data on voluntary disenrollment and grievances; and
       (5) data on quality indicators and health outcomes, 
     including, to the extent feasible and appropriate, data on 
     pediatric cases and on a gender-specific basis.
       (c) Availability.--A summary of the data collected under 
     subsection (a) shall be disclosed under section __121(b)(9). 
     The Secretary shall be provided access to all the data so 
     collected.
       (d) Variation Permitted.--The Secretary may provide for 
     variations in the application of the requirements of this 
     section to group health plans and health insurance issuers 
     based upon differences in the delivery system among such 
     plans and issuers as the Secretary deems appropriate.

     SEC. __113. PROCESS FOR SELECTION OF PROVIDERS.

       (a) In General.--A group health plan and a health insurance 
     issuer that offers health insurance coverage shall, if it 
     provides benefits through participating health care 
     professionals, have a written process for the selection of 
     participating health care professionals, including minimum 
     professional requirements.
       (b) Verification of Background.--Such process shall include 
     verification of a health care provider's license and a 
     history of suspension or revocation.
       (c) Restriction.--Such process shall not use a high-risk 
     patient base or location of a provider in an area with 
     residents with poorer health status as a basis for excluding 
     providers from participation.
       (d) Nondiscrimination Based on Licensure.--
       (1) In general.--Such process shall not discriminate with 
     respect to participation or indemnification as to any 
     provider who is acting within the scope of the provider's 
     license or certification under applicable State law, solely 
     on the basis of such license or certification.
       (2) Construction.--Paragraph (1) shall not be construed--
       (A) as requiring the coverage under a plan or coverage of 
     particular benefits or services or to prohibit a plan or 
     issuer from including providers only to the extent necessary 
     to meet the needs of the plan's or issuer's participants, 
     beneficiaries, or enrollees or from establishing any measure 
     designed to maintain quality and control costs consistent 
     with the responsibilities of the plan or issuer; or
       (B) to override any State licensure or scope-of-practice 
     law.
       (e) General Nondiscrimination.--
       (1) In general.--Subject to paragraph (2), such process 
     shall not discriminate with respect to selection of a health 
     care professional to be a participating health care provider, 
     or with respect to the terms and conditions of such 
     participation, based on the

[[Page S7589]]

     professional's race, color, religion, sex, national origin, 
     age, sexual orientation, or disability (consistent with the 
     Americans with Disabilities Act of 1990).
       (2) Rules.--The appropriate Secretary may establish such 
     definitions, rules, and exceptions as may be appropriate to 
     carry out paragraph (1), taking into account comparable 
     definitions, rules, and exceptions in effect under 
     employment-based nondiscrimination laws and regulations that 
     relate to each of the particular bases for discrimination 
     described in such paragraph.

     SEC. __114. DRUG UTILIZATION PROGRAM.

       A group health plan, and a health insurance issuer that 
     provides health insurance coverage, that includes benefits 
     for prescription drugs shall establish and maintain, as part 
     of its internal quality assurance and continuous quality 
     improvement program under section __111, a drug utilization 
     program which--
       (1) encourages appropriate use of prescription drugs by 
     participants, beneficiaries, and enrollees and providers, and
       (2) takes appropriate action to reduce the incidence of 
     improper drug use and adverse drug reactions and 
     interactions.

     SEC. __115. STANDARDS FOR UTILIZATION REVIEW ACTIVITIES.

       (a) Compliance With Requirements.--
       (1) In general.--A group health plan, and a health 
     insurance issuer that provides health insurance coverage, 
     shall conduct utilization review activities in connection 
     with the provision of benefits under such plan or coverage 
     only in accordance with a utilization review program that 
     meets the requirements of this section.
       (2) Use of outside agents.--Nothing in this section shall 
     be construed as preventing a group health plan or health 
     insurance issuer from arranging through a contract or 
     otherwise for persons or entities to conduct utilization 
     review activities on behalf of the plan or issuer, so long as 
     such activities are conducted in accordance with a 
     utilization review program that meets the requirements of 
     this section.
       (3) Utilization review defined.--For purposes of this 
     section, the terms ``utilization review'' and ``utilization 
     review activities'' mean procedures used to monitor or 
     evaluate the clinical necessity, appropriateness, efficacy, 
     or efficiency of health care services, procedures or 
     settings, and includes prospective review, concurrent review, 
     second opinions, case management, discharge planning, or 
     retrospective review.
       (b) Written Policies and Criteria.--
       (1) Written policies.--A utilization review program shall 
     be conducted consistent with written policies and procedures 
     that govern all aspects of the program.
       (2) Use of written criteria.--
       (A) In general.--Such a program shall utilize written 
     clinical review criteria developed pursuant to the program 
     with the input of appropriate physicians. Such criteria shall 
     include written clinical review criteria described in section 
     __111(b)(4)(B).
       (B) Continuing use of standards in retrospective review.--
     If a health care service has been specifically pre-authorized 
     or approved for an enrollee under such a program, the program 
     shall not, pursuant to retrospective review, revise or modify 
     the specific standards, criteria, or procedures used for the 
     utilization review for procedures, treatment, and services 
     delivered to the enrollee during the same course of 
     treatment.
       (c) Conduct of Program Activities.--
       (1) Administration by health care professionals.--A 
     utilization review program shall be administered by qualified 
     health care professionals who shall oversee review decisions. 
     In this subsection, the term ``health care professional'' 
     means a physician or other health care practitioner licensed, 
     accredited, or certified to perform specified health services 
     consistent with State law.
       (2) Use of qualified, independent personnel.--
       (A) In general.--A utilization review program shall provide 
     for the conduct of utilization review activities only through 
     personnel who are qualified and, to the extent required, who 
     have received appropriate training in the conduct of such 
     activities under the program.
       (B) Peer review of sample of adverse clinical 
     determinations.--Such a program shall provide that clinical 
     peers (as defined in section __191(c)(2)) shall evaluate the 
     clinical appropriateness of at least a sample of adverse 
     clinical determinations.
       (C) Prohibition of contingent compensation arrangements.--
     Such a program shall not, with respect to utilization review 
     activities, permit or provide compensation or anything of 
     value to its employees, agents, or contractors in a manner 
     that--
       (i) provides incentives, direct or indirect, for such 
     persons to make inappropriate review decisions, or
       (ii) is based, directly or indirectly, on the quantity or 
     type of adverse determinations rendered.
       (D) Prohibition of conflicts.--Such a program shall not 
     permit a health care professional who provides health care 
     services to an individual to perform utilization review 
     activities in connection with the health care services being 
     provided to the individual.
       (3) Accessibility of review.--Such a program shall provide 
     that appropriate personnel performing utilization review 
     activities under the program are reasonably accessible by 
     toll-free telephone during normal business hours to discuss 
     patient care and allow response to telephone requests, and 
     that appropriate provision is made to receive and respond 
     promptly to calls received during other hours.
       (4) Limits on frequency.--Such a program shall not provide 
     for the performance of utilization review activities with 
     respect to a class of services furnished to an individual 
     more frequently than is reasonably required to assess 
     whether the services under review are medically necessary 
     or appropriate.
       (5) Limitation on information requests.--Under such a 
     program, information shall be required to be provided by 
     health care providers only to the extent it is necessary to 
     perform the utilization review activity involved.
       (d) Deadline for Determinations.--
       (1) Prior authorization services.--Except as provided in 
     paragraph (2), in the case of a utilization review activity 
     involving the prior authorization of health care items and 
     services for an individual, the utilization review program 
     shall make a determination concerning such authorization, and 
     provide notice of the determination to the individual or the 
     individual's designee and the individual's health care 
     provider by telephone and in printed form, as soon as 
     possible in accordance with the medical exigencies of the 
     cases, and in no event later than 3 business days after the 
     date of receipt of information that is reasonably necessary 
     to make such determination.
       (2) Continued care.--In the case of a utilization review 
     activity involving authorization for continued or extended 
     health care services for an individual, or additional 
     services for an individual undergoing a course of continued 
     treatment prescribed by a health care provider, the 
     utilization review program shall make a determination 
     concerning such authorization, and provide notice of the 
     determination to the individual or the individual's designee 
     and the individual's health care provider by telephone and in 
     printed form, as soon as possible in accordance with the 
     medical exigencies of the cases, and in no event later than 1 
     business day after the date of receipt of information that is 
     reasonably necessary to make such determination. Such notice 
     shall include, with respect to continued or extended health 
     care services, the number of extended services approved, the 
     new total of approved services, the date of onset of 
     services, and the next review date, if any.
       (3) Previously provided services.--In the case of a 
     utilization review activity involving retrospective review of 
     health care services previously provided for an individual, 
     the utilization review program shall make a determination 
     concerning such services, and provide notice of the 
     determination to the individual or the individual's designee 
     and the individual's health care provider by telephone and in 
     printed form, within 30 days of the date of receipt of 
     information that is reasonably necessary to make such 
     determination.
       (4) Reference to special rules for emergency services, 
     maintenance care, and post-stabilization care.--For waiver of 
     prior authorization requirements in certain cases involving 
     emergency services and maintenance care and post-
     stabilization care, see subsections (a)(1) and (b) of section 
     __101, respectively.
       (e) Notice of Adverse Determinations.--
       (1) In general.--Notice of an adverse determination under a 
     utilization review program shall be provided in printed form 
     and shall include--
       (A) the reasons for the determination (including the 
     clinical rationale);
       (B) instructions on how to initiate an appeal under section 
     __132; and
       (C) notice of the availability, upon request of the 
     individual (or the individual's designee) of the clinical 
     review criteria relied upon to make such determination.
       (2) Specification of any additional information.--Such a 
     notice shall also specify what (if any) additional necessary 
     information must be provided to, or obtained by, the person 
     making the determination in order to make a decision on such 
     an appeal.

     SEC. __116. HEALTH CARE QUALITY ADVISORY BOARD.

       (a) Establishment.--The President shall establish an 
     advisory board to provide information to Congress and the 
     administration on issues relating to quality monitoring and 
     improvement in the health care provided under group health 
     plans and health insurance coverage.
       (b) Number and Appointment.--The advisory board shall be 
     composed of the Secretary of Health and Human Services (or 
     the Secretary's designee), the Secretary of Labor (or the 
     Secretary's designee), and 20 additional members appointed by 
     the President, in consultation with the Majority and Minority 
     Leaders of the Senate and House of Representatives. The 
     members so appointed shall include individuals with expertise 
     in--
       (1) consumer needs;
       (2) education and training of health professionals;
       (3) health care services;
       (4) health plan management;
       (5) health care accreditation, quality assurance, 
     improvement, measurement, and oversight;
       (6) medical practice, including practicing physicians;
       (7) prevention and public health; and
       (8) public and private group purchasing for small and large 
     employers or groups.
       (c) Duties.--The advisory board shall--
       (1) identify, update, and disseminate measures of health 
     care quality for group health

[[Page S7590]]

     plans and health insurance issuers, including network and 
     non-network plans;
       (2) advise the Secretary on the development and maintenance 
     of the minimum data set in section __112(b); and
       (3) advise the Secretary on standardized formats for 
     information on group health plans and health insurance 
     coverage.

     The measures identified under paragraph (1) may be used on a 
     voluntary basis by such plans and issuers. In carrying out 
     paragraph (1), the advisory board shall consult and cooperate 
     with national health care standard setting bodies which 
     define quality indicators, the Agency for Health Care Policy 
     and Research, the Institute of Medicine, and other public and 
     private entities that have expertise in health care quality.
       (d) Report.--The advisory board shall provide an annual 
     report to Congress and the President on the quality of the 
     health care in the United States and national and regional 
     trends in health care quality. Such report shall include a 
     description of determinants of health care quality and 
     measurements of practice and quality variability within the 
     United States.
       (e) Secretarial Consultation.--In serving on the advisory 
     board, the Secretaries of Health and Human Services and Labor 
     (or their designees) shall consult with the Secretaries 
     responsible for other Federal health insurance and health 
     care programs.
       (f) Vacancies.--Any vacancy on the board shall be filled in 
     such manner as the original appointment. Members of the board 
     shall serve without compensation but shall be reimbursed for 
     travel, subsistence, and other necessary expenses incurred by 
     them in the performance of their duties. Administrative 
     support, scientific support, and technical assistance for the 
     advisory board shall be provided by the Secretary of Health 
     and Human Services.
       (g) Continuation.--Section 14(a)(2)(B) of the Federal 
     Advisory Committee Act (5 U.S.C. App.; relating to the 
     termination of advisory committees) shall not apply to the 
     advisory board.

                     CHAPTER 3--Patient Information

     SEC. __121. PATIENT INFORMATION.

       (a) Disclosure Requirement.--
       (1) Group health plans.--A group health plan shall--
       (A) provide to participants and beneficiaries at the time 
     of initial coverage under the plan (or the effective date of 
     this section, in the case of individuals who are participants 
     or beneficiaries as of such date), and at least annually 
     thereafter, the information described in subsection (b) in 
     printed form;
       (B) provide to participants and beneficiaries, within a 
     reasonable period (as specified by the appropriate Secretary) 
     before or after the date of significant changes in the 
     information described in subsection (b), information in 
     printed form on such significant changes; and
       (C) upon request, make available to participants and 
     beneficiaries, the applicable authority, and prospective 
     participants and beneficiaries, the information described in 
     subsection (b) or (c) in printed form.
       (2) Health insurance issuers.--A health insurance issuer in 
     connection with the provision of health insurance coverage 
     shall--
       (A) provide to individuals enrolled under such coverage at 
     the time of enrollment, and at least annually thereafter, the 
     information described in subsection (b) in printed form;
       (B) provide to enrollees, within a reasonable period (as 
     specified by the appropriate Secretary) before or after the 
     date of significant changes in the information described in 
     subsection (b), information in printed form on such 
     significant changes; and
       (C) upon request, make available to the applicable 
     authority, to individuals who are prospective enrollees, and 
     to the public the information described in subsection (b) or 
     (c) in printed form.
       (b) Information Provided.--The information described in 
     this subsection with respect to a group health plan or health 
     insurance coverage offered by a health insurance issuer 
     includes the following:
       (1) Service area.--The service area of the plan or issuer.
       (2) Benefits.--Benefits offered under the plan or coverage, 
     including--
       (A) covered benefits, including benefit limits and coverage 
     exclusions;
       (B) cost sharing, such as deductibles, coinsurance, and 
     copayment amounts, including any liability for balance 
     billing, any maximum limitations on out of pocket expenses, 
     and the maximum out of pocket costs for services that are 
     provided by non participating providers or that are furnished 
     without meeting the applicable utilization review 
     requirements;
       (C) the extent to which benefits may be obtained from 
     nonparticipating providers;
       (D) the extent to which a participant, beneficiary, or 
     enrollee may select from among participating providers and 
     the types of providers participating in the plan or issuer 
     network;
       (E) process for determining experimental coverage; and
       (F) use of a prescription drug formulary.
       (3) Access.--A description of the following:
       (A) The number, mix, and distribution of providers under 
     the plan or coverage.
       (B) Out-of-network coverage (if any) provided by the plan 
     or coverage.
       (C) Any point-of-service option (including any supplemental 
     premium or cost-sharing for such option).
       (D) The procedures for participants, beneficiaries, and 
     enrollees to select, access, and change participating primary 
     and specialty providers.
       (E) The rights and procedures for obtaining referrals 
     (including standing referrals) to participating and 
     nonparticipating providers.
       (F) The name, address, and telephone number of 
     participating health care providers and an indication of 
     whether each such provider is available to accept new 
     patients.
       (G) Any limitations imposed on the selection of qualifying 
     participating health care providers, including any 
     limitations imposed under section __103(b)(2).
       (H) How the plan or issuer addresses the needs of 
     participants, beneficiaries, and enrollees and others who do 
     not speak English or who have other special communications 
     needs in accessing providers under the plan or coverage, 
     including the provision of information described in this 
     subsection and subsection (c) to such individuals and 
     including the provision of information in a language other 
     than English if 5 percent of the number of participants, 
     beneficiaries, and enrollees communicate in that language 
     instead of English.
       (4) Out-of-area coverage.--Out-of-area coverage provided by 
     the plan or issuer.
       (5) Emergency coverage.--Coverage of emergency services, 
     including--
       (A) the appropriate use of emergency services, including 
     use of the 911 telephone system or its local equivalent in 
     emergency situations and an explanation of what constitutes 
     an emergency situation;
       (B) the process and procedures of the plan or issuer for 
     obtaining emergency services; and
       (C) the locations of (i) emergency departments, and (ii) 
     other settings, in which plan physicians and hospitals 
     provide emergency services and post-stabilization care.
       (6) Percentage of premiums used for benefits (loss-
     ratios).--In the case of health insurance coverage only (and 
     not with respect to group health plans that do not provide 
     coverage through health insurance coverage), a description of 
     the overall loss-ratio for the coverage (as defined in 
     accordance with rules established or recognized by the 
     Secretary of Health and Human Services).
       (7) Prior authorization rules.--Rules regarding prior 
     authorization or other review requirements that could result 
     in noncoverage or nonpayment.
       (8) Grievance and appeals procedures.--All appeal or 
     grievance rights and procedures under the plan or coverage, 
     including the method for filing grievances and the time 
     frames and circumstances for acting on grievances and 
     appeals, who is the applicable authority with respect to the 
     plan or issuer, and the availability of assistance through an 
     ombudsman to individuals in relation to group health plans 
     and health insurance coverage.
       (9) Quality assurance.--A summary description of the data 
     on quality collected under section __112(a), including a 
     summary description of the data on satisfaction of 
     participants, beneficiaries, and enrollees (including data on 
     individual voluntary disenrollment and grievances and 
     appeals) described in section __112(b)(4).
       (10) Summary of provider financial incentives.--A summary 
     description of the information on the types of financial 
     payment incentives (described in section 1852(j)(4) of the 
     Social Security Act) provided by the plan or issuer under the 
     coverage.
       (11) Information on issuer.--Notice of appropriate mailing 
     addresses and telephone numbers to be used by participants, 
     beneficiaries, and enrollees in seeking information or 
     authorization for treatment.
       (12) Availability of information on request.--Notice that 
     the information described in subsection (c) is available upon 
     request.
       (c) Information Made Available Upon Request.--The 
     information described in this subsection is the following:
       (1) Utilization review activities.--A description of 
     procedures used and requirements (including circumstances, 
     time frames, and appeal rights) under any utilization review 
     program under section __115, including under any drug 
     formulary program under section __107.
       (2) Grievance and appeals information.--Information on the 
     number of grievances and appeals and on the disposition in 
     the aggregate of such matters.
       (3) Method of physician compensation.--An overall summary 
     description as to the method of compensation of participating 
     physicians, including information on the types of financial 
     payment incentives (described in section 1852(j)(4) of the 
     Social Security Act) provided by the plan or issuer under the 
     coverage.
       (4) Specific information on credentials of participating 
     providers.--In the case of each participating provider, a 
     description of the credentials of the provider.
       (5) Confidentiality policies and procedures.--A description 
     of the policies and procedures established to carry out 
     section __122.
       (6) Formulary restrictions.--A description of the nature of 
     any drug formula restrictions.
       (7) Participating provider list.--A list of current 
     participating health care providers.
       (d) Form of Disclosure.--
       (1) Uniformity.--Information required to be disclosed under 
     this section shall be provided in accordance with uniform, 
     national reporting standards specified by the Secretary, 
     after consultation with applicable

[[Page S7591]]

     State authorities, so that prospective enrollees may compare 
     the attributes of different issuers and coverage offered 
     within an area.
       (2) Information into handbook.--Nothing in this section 
     shall be construed as preventing a group health plan or 
     health insurance issuer from making the information under 
     subsections (b) and (c) available to participants, 
     beneficiaries, and enrollees through an enrollee handbook or 
     similar publication.
       (3) Updating participating provider information.--The 
     information on participating health care providers described 
     in subsection (b)(3)(C) shall be updated within such 
     reasonable period as determined appropriate by the Secretary. 
     Nothing in this section shall prevent an issuer from changing 
     or updating other information made available under this 
     section.
       (e) Construction.--Nothing in this section shall be 
     construed as requiring public disclosure of individual 
     contracts or financial arrangements between a group health 
     plan or health insurance issuer and any provider.

     SEC. __122. PROTECTION OF PATIENT CONFIDENTIALITY.

       Insofar as a group health plan, or a health insurance 
     issuer that offers health insurance coverage, maintains 
     medical records or other health information regarding 
     participants, beneficiaries, and enrollees, the plan or 
     issuer shall establish procedures--
       (1) to safeguard the privacy of any individually 
     identifiable enrollee information;
       (2) to maintain such records and information in a manner 
     that is accurate and timely, and
       (3) to assure timely access of such individuals to such 
     records and information.

     SEC. __123. HEALTH INSURANCE OMBUDSMEN.

       (a) In General.--Each State that obtains a grant under 
     subsection (c) shall provide for creation and operation of a 
     Health Insurance Ombudsman through a contract with a not-for-
     profit organization that operates independent of group health 
     plans and health insurance issuers. Such Ombudsman shall be 
     responsible for at least the following:
       (1) To assist consumers in the State in choosing among 
     health insurance coverage or among coverage options offered 
     within group health plans.
       (2) To provide counseling and assistance to enrollees 
     dissatisfied with their treatment by health insurance issuers 
     and group health plans in regard to such coverage or plans 
     and with respect to grievances and appeals regarding 
     determinations under such coverage or plans.
       (b) Federal Role.--In the case of any State that does not 
     provide for such an Ombudsman under subsection (a), the 
     Secretary shall provide for the creation and operation of a 
     Health Insurance Ombudsman through a contract with a not-for-
     profit organization that operates independent of group health 
     plans and health insurance issuers and that is responsible 
     for carrying out with respect to that State the functions 
     otherwise provided under subsection (a) by a Health Insurance 
     Ombudsman.
       (c) Authorization of Appropriations.--There are authorized 
     to be appropriated to the Secretary of Health and Human 
     Services such amounts as may be necessary to provide for 
     grants to States for contracts for Health Insurance Ombudsmen 
     under subsection (a) or contracts for such Ombudsmen under 
     subsection (b).
       (d) Construction.--Nothing in this section shall be 
     construed to prevent the use of other forms of enrollee 
     assistance.

              CHAPTER 4--GRIEVANCE AND APPEALS PROCEDURES

     SEC. __131. ESTABLISHMENT OF GRIEVANCE PROCESS.

       (a) Establishment of Grievance System.--
       (1) In general.--A group health plan, and a health 
     insurance issuer in connection with the provision of health 
     insurance coverage, shall establish and maintain a system to 
     provide for the presentation and resolution of oral and 
     written grievances brought by individuals who are 
     participants, beneficiaries, or enrollees, or health care 
     providers or other individuals acting on behalf of an 
     individual and with the individual's consent, regarding any 
     aspect of the plan's or issuer's services.
       (2) Scope.--The system shall include grievances regarding 
     access to and availability of services, quality of care, 
     choice and accessibility of providers, network adequacy, and 
     compliance with the requirements of this subtitle.
       (b) Grievance System.--Such system shall include the 
     following components with respect to individuals who are 
     participants, beneficiaries, or enrollees:
       (1) Written notification to all such individuals and 
     providers of the telephone numbers and business addresses of 
     the plan or issuer personnel responsible for resolution of 
     grievances and appeals.
       (2) A system to record and document, over a period of at 
     least 3 previous years, all grievances and appeals made and 
     their status.
       (3) A process providing for timely processing and 
     resolution of grievances.
       (4) Procedures for follow-up action, including the methods 
     to inform the person making the grievance of the resolution 
     of the grievance.
       (5) Notification to the continuous quality improvement 
     program under section __111(a) of all grievances and appeals 
     relating to quality of care.

     SEC. __132. INTERNAL APPEALS OF ADVERSE DETERMINATIONS.

       (a) Right of Appeal.--
       (1) In general.--A participant or beneficiary in a group 
     health plan, and an enrollee in health insurance coverage 
     offered by a health insurance issuer, and any provider or 
     other person acting on behalf of such an individual with the 
     individual's consent, may appeal any appealable decision (as 
     defined in paragraph (2)) under the procedures described in 
     this section and (to the extent applicable) section __133. 
     Such individuals and providers shall be provided with a 
     written explanation of the appeal process and the 
     determination upon the conclusion of the appeals process and 
     as provided in section __121(b)(8).
       (2) Appealable decision defined.--In this section, the term 
     ``appealable decision'' means any of the following:
       (A) Denial, reduction, or termination of, or failure to 
     provide or make payment (in whole or in part) for, a benefit, 
     including a failure to cover an item or service for which 
     benefits are otherwise provided because it is determined to 
     be experimental or investigational or not medically necessary 
     or appropriate.
       (B) Failure to provide coverage of emergency services or 
     reimbursement of maintenance care or post-stabilization care 
     under section __101.
       (C) Failure to provide a choice of provider under section 
     __103.
       (D) Failure to provide qualified health care providers 
     under section __103.
       (E) Failure to provide access to specialty and other care 
     under section __104.
       (F) Failure to provide continuation of care under section 
     __105.
       (G) Failure to provide coverage of routine patient costs in 
     connection with an approval clinical trial under section 
     __106.
       (H) Failure to provide access to needed drugs under section 
     __107(a)(3) or __107(b).
       (I) Discrimination in delivery of services in violation of 
     section __109.
       (J) An adverse determination under a utilization review 
     program under section __115.
       (K) The imposition of a limitation that is prohibited under 
     section __151.
       (b) Internal Appeal Process.--
       (1) In general.--Each group health plan and health 
     insurance issuer shall establish and maintain an internal 
     appeal process under which any participant, beneficiary, 
     enrollee, or provider acting on behalf of such an individual 
     with the individual's consent, who is dissatisfied with any 
     appealable decision has the opportunity to appeal the 
     decision through an internal appeal process. The appeal may 
     be communicated orally.
       (2) Conduct of review.--
       (A) In general.--The process shall include a review of the 
     decision by a physician or other health care professional (or 
     professionals) who has been selected by the plan or issuer 
     and who has not been involved in the appealable decision at 
     issue in the appeal.
       (B) Availability and participation of clinical peers.--The 
     individuals conducting such review shall include one or more 
     clinical peers (as defined in section __191(c)(2)) who have 
     not been involved in the appealable decision at issue in the 
     appeal.
       (3) Deadline.--
       (A) In general.--Subject to subsection (c), the plan or 
     issuer shall conclude each appeal as soon as possible after 
     the time of the receipt of the appeal in accordance with 
     medical exigencies of the case involved, but in no event 
     later than--
       (i) 72 hours after the time of receipt of an expedited 
     appeal, and
       (ii) except as provided in subparagraph (B), 30 business 
     days after such time (or, if the participant, beneficiary, or 
     enrollee supplies additional information that was not 
     available to the plan or issuer at the time of the receipt of 
     the appeal, after the date of supplying such additional 
     information) in the case of all other appeals.
       (B) Extension.--In the case of an appeal that does not 
     relate to a decision regarding an expedited appeal and that 
     does not involve medical exigencies, if a group health plan 
     or health insurance issuer is unable to conclude the appeal 
     within the time period provided under subparagraph (A)(ii) 
     due to circumstances beyond the control of the plan or 
     issuer, the deadline shall be extended for up to an 
     additional 10 business days if the plan or issuer provides, 
     on or before 10 days before the deadline otherwise 
     applicable, written notice to the participant, beneficiary, 
     or enrollee and the provider involved of the extension and 
     the reasons for the extension.
       (4) Notice.--If a plan or issuer denies an appeal, the plan 
     or issuer shall provide the participant, beneficiary, or 
     enrollee and provider involved with notice in printed form of 
     the denial and the reasons therefore, together with a notice 
     in printed form of rights to any further appeal.
       (c) Expedited Review Process.--
       (1) In general.--A group health plan, and a health 
     insurance issuer, shall establish procedures in writing for 
     the expedited consideration of appeals under subsection (b) 
     in situations in which the application of the normal 
     timeframe for making a determination could seriously 
     jeopardize the life or health of the participant, 
     beneficiary, or enrollee or such an individual's ability to 
     regain maximum function.
       (2) Process.--Under such procedures--
       (A) the request for expedited appeal may be submitted 
     orally or in writing by an individual or provider who is 
     otherwise entitled to request the appeal;

[[Page S7592]]

       (B) all necessary information, including the plan's or 
     issuer's decision, shall be transmitted between the plan or 
     issuer and the requester by telephone, facsimile, or other 
     similarly expeditious available method; and
       (C) the plan or issuer shall expedite the appeal if the 
     request for an expedited appeal is submitted under 
     subparagraph (A) by a physician and the request indicates 
     that the situation described in paragraph (1) exists.
       (d) Direct Use of Further Appeals.--In the event that the 
     plan or issuer fails to comply with any of the deadlines for 
     completion of appeals under this section or in the event that 
     the plan or issuer for any reason expressly waives its rights 
     to an internal review of an appeal under subsection (b), the 
     participant, beneficiary, or enrollee involved and the 
     provider involved shall be relieved of any obligation to 
     complete the appeal involved and may, at such an individual's 
     or provider's option, proceed directly to seek further appeal 
     through any applicable external appeals process.

     SEC. __133. EXTERNAL APPEALS OF ADVERSE DETERMINATIONS.

       (a) Right to External Appeal.--
       (1) In general.--A group health plan, and a health 
     insurance issuer offering group health insurance coverage, 
     shall provide for an external appeals process that meets the 
     requirements of this section in the case of an externally 
     appealable decision described in paragraph (2). The 
     appropriate Secretary shall establish standards to carry out 
     such requirements.
       (2) Externally appealable decision defined.--For purposes 
     of this section, the term ``externally appealable decision'' 
     means an appealable decision (as defined in section 
     __132(a)(2)) if--
       (A) the amount involved exceeds a significant threshold; or
       (B) the patient's life or health is jeopardized as a 
     consequence of the decision.
     Such term does not include a denial of coverage for services 
     that are specifically listed in plan or coverage documents as 
     excluded from coverage.
       (3) Exhaustion of internal appeals process.--A plan or 
     issuer may condition the use of an external appeal process in 
     the case of an externally appealable decision upon completion 
     of the internal review process provided under section __132, 
     but only if the decision is made in a timely basis consistent 
     with the deadlines provided under this chapter.
       (b) General Elements of External Appeals Process.--
       (1) Contract with qualified external appeal entity.--
       (A) Contract requirement.--Subject to subparagraph (B), the 
     external appeal process under this section of a plan or 
     issuer shall be conducted under a contract between the plan 
     or issuer and one or more qualified external appeal entities 
     (as defined in subsection (c)).
       (B) Restrictions on qualified external appeal entity.--
       (i) By state for health insurance issuers.--With respect to 
     health insurance issuers in a State, the State may provide 
     for external review activities to be conducted by a qualified 
     external appeal entity that is designated by the State or 
     that is selected by the State in such a manner as to assure 
     an unbiased determination.
       (ii) By federal government for group health plans.--With 
     respect to group health plans, the appropriate Secretary may 
     exercise the same authority as a State may exercise with 
     respect to health insurance issuers under clause (i). Such 
     authority may include requiring the use of the qualified 
     external appeal entity designated or selected under such 
     clause.
       (iii) Limitation on plan or issuer selection.--If an 
     applicable authority permits more than one entity to qualify 
     as a qualified external appeal entity with respect to a group 
     health plan or health insurance issuer and the plan or issuer 
     may select among such qualified entities, the applicable 
     authority--

       (I) shall assure that the selection process will not create 
     any incentives for external appeal entities to make a 
     decision in a biased manner, and
       (II) shall implement a procedures for auditing a sample of 
     decisions by such entities to assure that no such decisions 
     are made in a biased manner.

       (C) Other terms and conditions.--The terms and conditions 
     of a contract under this paragraph shall be consistent with 
     the standards the appropriate Secretary shall establish to 
     assure there is no real or apparent conflict of interest in 
     the conduct of external appeal activities. Such contract 
     shall provide that the direct costs of the process (not 
     including costs of representation of a participant, 
     beneficiary, or enrollee) shall be paid by the plan or 
     issuer, and not by the participant, beneficiary, or enrollee.
       (2) Elements of process.--An external appeal process shall 
     be conducted consistent with standards established by the 
     appropriate Secretary that include at least the following:
       (A) Fair process; de novo determination.--The process shall 
     provide for a fair, de novo determination.
       (B) Determination concerning externally appealable 
     decisions.--A qualified external appeal entity shall 
     determine whether a decision is an externally appealable 
     decision and related decisions, including--
       (i) whether such a decision involves an expedited appeal;
       (ii) the appropriate deadlines for internal review process 
     required due to medical exigencies in a case; and
       (iii) whether such a process has been completed.
       (C) Opportunity to submit evidence, have representation, 
     and make oral presentation.--Each party to an externally 
     appealable decision--
       (i) may submit and review evidence related to the issues in 
     dispute,
       (ii) may use the assistance or representation of one or 
     more individuals (any of whom may be an attorney), and
       (iii) may make an oral presentation.
       (D) Provision of information.--The plan or issuer involved 
     shall provide timely access to all its records relating to 
     the matter of the externally appealable decision and to all 
     provisions of the plan or health insurance coverage 
     (including any coverage manual) relating to the matter.
       (E) Timely decisions.--A determination by the external 
     appeal entity on the decision shall--
       (i) be made orally or in writing and, if it is made orally, 
     shall be supplied to the parties in writing as soon as 
     possible;
       (ii) be binding on the plan or issuer;
       (iii) be made in accordance with the medical exigencies of 
     the case involved, but in no event later than 60 days (or 72 
     hours in the case of an expedited appeal) from the date of 
     completion of the filing of notice of external appeal of the 
     decision;
       (iv) state, in layperson's language, the basis for the 
     determination, including, if relevant, any basis in the terms 
     or conditions of the plan or coverage; and
       (v) inform the participant, beneficiary, or enrollee of the 
     individual's rights to seek further review by the courts (or 
     other process) of the external appeal determination.
       (c) Qualifications of External Appeal Entities.--
       (1) In general.--For purposes of this section, the term 
     ``qualified external appeal entity'' means, in relation to a 
     plan or issuer, an entity (which may be a governmental 
     entity) that is certified under paragraph (2) as meeting the 
     following requirements:
       (A) There is no real or apparent conflict of interest that 
     would impede the entity conducting external appeal activities 
     independent of the plan or issuer.
       (B) The entity conducts external appeal activities through 
     clinical peers.
       (C) The entity has sufficient medical, legal, and other 
     expertise and sufficient staffing to conduct external appeal 
     activities for the plan or issuer on a timely basis 
     consistent with subsection (b)(3)(E).
       (D) The entity meets such other requirements as the 
     appropriate Secretary may impose.
       (2) Certification of external appeal entities.--
       (A) In general.--In order to be treated as a qualified 
     external appeal entity with respect to--
       (i) a group health plan, the entity must be certified (and, 
     in accordance with subparagraph (B), periodically 
     recertified) as meeting the requirements of paragraph (1) by 
     the Secretary of Labor (or under a process recognized or 
     approved by the Secretary of Labor); or
       (ii) a health insurance issuer operating in a State, the 
     entity must be certified (and, in accordance with 
     subparagraph (B), periodically recertified) as meeting such 
     requirements by the applicable State authority (or, if the 
     States has not established an adequate certification and 
     recertification process, by the Secretary of Health and Human 
     Services, or under a process recognized or approved by such 
     Secretary).
       (B) Recertification process.--The appropriate Secretary 
     shall develop standards for the recertification of external 
     appeal entities. Such standards shall include a specification 
     of--
       (i) the information required to be submitted as a condition 
     of recertification on the entity's performance of external 
     appeal activities, which information shall include the number 
     of cases reviewed, a summary of the disposition of those 
     cases, the length of time in making determinations on those 
     cases, and such information as may be necessary to assure the 
     independence of the entity from the plans or issuers for 
     which external appeal activities are being conducted; and
       (ii) the periodicity which recertification will be 
     required.
       (d) Continuing Legal Rights of Enrollees.--Nothing in this 
     subtitle shall be construed as removing any legal rights of 
     participants, beneficiaries, enrollees, and others under 
     State or Federal law, including the right to file judicial 
     actions to enforce rights.

         CHAPTER 5--PROTECTING THE DOCTOR-PATIENT RELATIONSHIP

     SEC. __141. PROHIBITION OF INTERFERENCE WITH CERTAIN MEDICAL 
                   COMMUNICATIONS.

       (a) Prohibition.--
       (1) General rule.--The provisions of any contract or 
     agreement, or the operation of any contract or agreement, 
     between a group health plan or health insurance issuer in 
     relation to health insurance coverage (including any 
     partnership, association, or other organization that enters 
     into or administers such a contract or agreement) and a 
     health care provider (or group of health care providers) 
     shall not prohibit or restrict the provider from engaging in 
     medical communications with the provider's patient.

[[Page S7593]]

       (2) Nullification.--Any contract provision or agreement 
     described in paragraph (1) shall be null and void.
       (b) Rules of Construction.--Nothing in this section shall 
     be construed--
       (1) to prohibit the enforcement, as part of a contract or 
     agreement to which a health care provider is a party, of any 
     mutually agreed upon terms and conditions, including terms 
     and conditions requiring a health care provider to 
     participate in, and cooperate with, all programs, policies, 
     and procedures developed or operated by a group health plan 
     or health insurance issuer to assure, review, or improve the 
     quality and effective utilization of health care services (if 
     such utilization is according to guidelines or protocols that 
     are based on clinical or scientific evidence and the 
     professional judgment of the provider) but only if the 
     guidelines or protocols under such utilization do not 
     prohibit or restrict medical communications between providers 
     and their patients; or
       (2) to permit a health care provider to misrepresent the 
     scope of benefits covered under the group health plan or 
     health insurance coverage or to otherwise require a group 
     health plan health insurance issuer to reimburse providers 
     for benefits not covered under the plan or coverage.
       (c) Medical Communication Defined.--In this section:
       (1) In general.--The term ``medical communication'' means 
     any communication made by a health care provider with a 
     patient of the health care provider (or the guardian or legal 
     representative of such patient) with respect to--
       (A) the patient's health status, medical care, or treatment 
     options;
       (B) any utilization review requirements that may affect 
     treatment options for the patient; or
       (C) any financial incentives that may affect the treatment 
     of the patient.
       (2) Misrepresentation.--The term ``medical communication'' 
     does not include a communication by a health care provider 
     with a patient of the health care provider (or the guardian 
     or legal representative of such patient) if the communication 
     involves a knowing or willful misrepresentation by such 
     provider.

     SEC. __142. PROHIBITION AGAINST TRANSFER OF INDEMNIFICATION 
                   OR IMPROPER INCENTIVE ARRANGEMENTS.

       (a) Prohibition of Transfer of Indemnification.--
       (1) In general.--No contract or agreement between a group 
     health plan or health insurance issuer (or any agent acting 
     on behalf of such a plan or issuer) and a health care 
     provider shall contain any provision purporting to transfer 
     to the health care provider by indemnification or otherwise 
     any liability relating to activities, actions, or omissions 
     of the plan, issuer, or agent (as opposed to the provider).
       (2) Nullification.--Any contract or agreement provision 
     described in paragraph (1) shall be null and void.
       (b) Prohibition of Improper Physician Incentive Plans.--
       (1) In general.--A group health plan and a health insurance 
     issuer offering health insurance coverage may not operate any 
     physician incentive plan (as defined in subparagraph (B) of 
     section 1876(i)(8) of the Social Security Act) unless the 
     requirements described in subparagraph (A) of such section 
     are met with respect to such a plan.
       (2) Application.--For purposes of carrying out paragraph 
     (1), any reference in section 1876(i)(8) of the Social 
     Security Act to the Secretary, an eligible organization, or 
     an individual enrolled with the organization shall be treated 
     as a reference to the applicable authority, a group health 
     plan or health insurance issuer, respectively, and a 
     participant, beneficiary, or enrollee with the plan or 
     organization, respectively.

     SEC. __143. ADDITIONAL RULES REGARDING PARTICIPATION OF 
                   HEALTH CARE PROFESSIONALS.

       (a) Procedures.--Insofar as a group health plan, or health 
     insurance issuer that offers health insurance coverage, 
     provides benefits through participating health care 
     professionals, the plan or issuer shall establish reasonable 
     procedures relating to the participation (under an agreement 
     between a professional and the plan or issuer) of such 
     professionals under the plan or coverage. Such procedures 
     shall include--
       (1) providing notice of the rules regarding participation;
       (2) providing written notice of participation decisions 
     that are adverse to professionals; and
       (3) providing a process within the plan or issuer for 
     appealing such adverse decisions, including the presentation 
     of information and views of the professional regarding such 
     decision.
       (b) Consultation in Medical Policies.--A group health plan, 
     and health insurance issuer that offers health insurance 
     coverage, shall consult with participating physicians (if 
     any) regarding the plan's or issuer's medical policy, 
     quality, and medical management procedures.

     SEC. __144. PROTECTION FOR PATIENT ADVOCACY.

       (a) Protection for Use of Utilization Review and Grievance 
     Process.--A group health plan, and a health insurance issuer 
     with respect to the provision of health insurance coverage, 
     may not retaliate against a participant, beneficiary, 
     enrollee, or health care provider based on the participant's, 
     beneficiary's, enrollee's or provider's use of, or 
     participation in, a utilization review process or a grievance 
     process of the plan or issuer (including an internal or 
     external review or appeal process) under this subtitle.
       (b) Protection for Quality Advocacy by Health Care 
     Professionals.--
       (1) In general.--A group health plan or health insurance 
     issuer may not retaliate or discriminate against a protected 
     health care professional because the professional in good 
     faith--
       (A) discloses information relating to the care, services, 
     or conditions affecting one or more participants, 
     beneficiaries, or enrollees of the plan or issuer to an 
     appropriate public regulatory agency, an appropriate private 
     accreditation body, or appropriate management personnel of 
     the plan or issuer; or
       (B) initiates, cooperates, or otherwise participates in an 
     investigation or proceeding by such an agency with respect to 
     such care, services, or conditions.

     If an institutional health care provider is a participating 
     provider with such a plan or issuer or otherwise receives 
     payments for benefits provided by such a plan or issuer, the 
     provisions of the previous sentence shall apply to the 
     provider in relation to care, services, or conditions 
     affecting one or more patients within an institutional health 
     care provider in the same manner as they apply to the plan or 
     issuer in relation to care, services, or conditions provided 
     to one or more participants, beneficiaries, or enrollees; and 
     for purposes of applying this sentence, any reference to a 
     plan or issuer is deemed a reference to the institutional 
     health care provider.
       (2) Good faith action.--For purposes of paragraph (1), a 
     protected health care professional is considered to be acting 
     in good faith with respect to disclosure of information or 
     participation if, with respect to the information disclosed 
     as part of the action--
       (A) the disclosure is made on the basis of personal 
     knowledge and is consistent with that degree of learning and 
     skill ordinarily possessed by health care professionals with 
     the same licensure or certification and the same experience;
       (B) the professional reasonably believes the information to 
     be true;
       (C) the information evidences either a violation of a law, 
     rule, or regulation, of an applicable accreditation standard, 
     or of a generally recognized professional or clinical 
     standard or that a patient is in imminent hazard of loss of 
     life or serious injury; and
       (D) subject to subparagraphs (B) and (C) of paragraph (3), 
     the professional has followed reasonable internal procedures 
     of the plan, issuer, or institutional health care provider 
     established or the purpose of addressing quality concerns 
     before making the disclosure.
       (3) Exception and special rule.--
       (A) General exception.--Paragraph (1) does not protect 
     disclosures that would violate Federal or State law or 
     diminish or impair the rights of any person to the continued 
     protection of confidentiality of communications provided by 
     such law.
       (B) Notice of internal procedures.--Subparagraph (D) of 
     paragraph (2) shall not apply unless the internal procedures 
     involved are reasonably expected to be known to the health 
     care professional involved. For purposes of this 
     subparagraph, a health care professional is reasonably 
     expected to know of internal procedures if those procedures 
     have been made available to the professional through 
     distribution or posting.
       (C) Internal procedure exception.--Subparagraph (D) of 
     paragraph (2) also shall not apply if--
       (i) the disclosure relates to an imminent hazard of loss of 
     life or serious injury to a patient;
       (ii) the disclosure is made to an appropriate private 
     accreditation body pursuant to disclosure procedures 
     established by the body; or
       (iii) the disclosure is in response to an inquiry made in 
     an investigation or proceeding of an appropriate public 
     regulatory agency and the information disclosed is limited to 
     the scope of the investigation or proceeding.
       (4) Additional considerations.--It shall not be a violation 
     of paragraph (1) to take an adverse action against a 
     protected health care professional if the plan, issuer, or 
     provider taking the adverse action involved demonstrates that 
     it would have taken the same adverse action even in the 
     absence of the activities protected under such paragraph.
       (5) Notice.--A group health plan, health insurance issuer, 
     and institutional health care provider shall post a notice, 
     to be provided or approved by the Secretary of Labor, setting 
     forth excerpts from, or summaries of, the pertinent 
     provisions of this subsection and information pertaining to 
     enforcement of such provisions.
       (6) Constructions.--
       (A) Determinations of coverage.--Nothing in this subsection 
     shall be construed to prohibit a plan or issuer from making a 
     determination not to pay for a particular medical treatment 
     or service or the services of a type of health care 
     professional.
       (B) Enforcement of peer review protocols and internal 
     procedures.--Nothing in this subsection shall be construed to 
     prohibit a plan, issuer, or provider from establishing and 
     enforcing reasonable peer review or utilization review 
     protocols or determining whether a protected health care 
     professional has complied with those protocols or from 
     establishing and enforcing internal procedures for the 
     purpose of addressing quality concerns.

[[Page S7594]]

       (C) Relation to other rights.--Nothing in this subsection 
     shall be construed to abridge rights of participants, 
     beneficiaries, enrollees, and protected health care 
     professionals under other applicable Federal or State laws.
       (7) Protected health care professional defined.--For 
     purposes of this subsection, the term ``protected health care 
     professional'' means an individual who is a licensed or 
     certified health care professional and who--
       (A) with respect to a group health plan or health insurance 
     issuer, is an employee of the plan or issuer or has a 
     contract with the plan or issuer for provision of services 
     for which benefits are available under the plan or issuer; or
       (B) with respect to an institutional health care provider, 
     is an employee of the provider or has a contract or other 
     arrangement with the provider respecting the provision of 
     health care services.

               CHAPTER 6--PROMOTING GOOD MEDICAL PRACTICE

     SEC. __151. PROMOTING GOOD MEDICAL PRACTICE.

       (a) Prohibiting Arbitrary Limitations or Conditions for the 
     Provision of Services.--
       (1) In general.--A group health plan, and a health 
     insurance issuer in connection with the provision of health 
     insurance coverage, may not arbitrarily interfere with or 
     alter the decision of the treating physician regarding the 
     manner or setting in which particular services are delivered 
     if the services are medically necessary or appropriate for 
     treatment or diagnosis to the extent that such treatment or 
     diagnosis is otherwise a covered benefit.
       (2) Construction.--Paragraph (1) shall not be construed as 
     prohibiting a plan or issuer from limiting the delivery of 
     services to one or more health care providers within a 
     network of such providers.
       (3) Manner or setting defined.--In paragraph (1), the term 
     ``manner or setting'' means the location of treatment, such 
     as whether treatment is provided on an inpatient or 
     outpatient basis, and the duration of treatment, such as the 
     number of days in a hospital, Such term does not include the 
     coverage of a particular service or treatment.
       (b) No Change in Coverage.--Subsection (a) shall not be 
     construed as requiring coverage of particular services the 
     coverage of which is otherwise not covered under the terms of 
     the plan or coverage or from conducting utilization review 
     activities consistent with this subsection.
       (c) Medical Necessity or Appropriateness Defined.--In 
     subsection (a), the term ``medically necessary or 
     appropriate'' means, with respect to a service or benefit, a 
     service or benefit which is consistent with generally 
     accepted principles of professional medical practice.

     SEC. __152. STANDARDS RELATING TO BENEFITS FOR CERTAIN BREAST 
                   CANCER TREATMENT.

       (a) Inpatient Care.--
       (1) In general.--A group health plan, and a health 
     insurance issuer offering group health insurance coverage, 
     that provides medical and surgical benefits shall ensure that 
     inpatient coverage with respect to the treatment of breast 
     cancer is provided for a period of time as is determined by 
     the attending physician, in his or her professional judgment 
     consistent with generally accepted medical standards, in 
     consultation with the patient, to be medically appropriate 
     following--
       (A) a mastectomy;
       (B) a lumpectomy; or
       (C) a lymph node dissection for the treatment of breast 
     cancer.
       (2) Exception.--Nothing in this section shall be construed 
     as requiring the provision of inpatient coverage if the 
     attending physician and patient determine that a shorter 
     period of hospital stay is medically appropriate.
       (b) Prohibitions.--A group health plan, and a health 
     insurance issuer offering group health insurance coverage in 
     connection with a group health plan, may not--
       (1) deny to a woman eligibility, or continued eligibility, 
     to enroll or to renew coverage under the terms of the plan, 
     solely for the purpose of avoiding the requirements of this 
     section;
       (2) provide monetary payments or rebates to women to 
     encourage such women to accept less than the minimum 
     protections available under this section;
       (3) penalize or otherwise reduce or limit the reimbursement 
     of an attending provider because such provider provided care 
     to an individual participant or beneficiary in accordance 
     with this section;
       (4) provide incentives (monetary or otherwise) to an 
     attending provider to induce such provider to provide care to 
     an individual participant or beneficiary in a manner 
     inconsistent with this section; or
       (5) subject to subsection (c)(3), restrict benefits for any 
     portion of a period within a hospital length of stay required 
     under subsection (a) in a manner which is less favorable than 
     the benefits provided for any preceding portion of such stay.
       (c) Rules of Construction.--
       (1) Nothing in this section shall be construed to require a 
     woman who is a participant or beneficiary--
       (A) to undergo a mastectomy or lymph node dissection in a 
     hospital; or
       (B) to stay in the hospital for a fixed period of time 
     following a mastectomy or lymph node dissection.
       (2) This section shall not apply with respect to any group 
     health plan, or any group health insurance coverage offered 
     by a health insurance issuer, which does not provide benefits 
     for hospital lengths of stay in connection with a mastectomy 
     or lymph node dissection for the treatment of breast cancer.
       (3) Nothing in this section shall be construed as 
     preventing a group health plan or issuer from imposing 
     deductibles, coinsurance, or other cost-sharing in relation 
     to benefits for hospital lengths of stay in connection with a 
     mastectomy or lymph node dissection for the treatment of 
     breast cancer under the plan (or under health insurance 
     coverage offered in connection with a group health plan), 
     except that such coinsurance or other cost-sharing for any 
     portion of a period within a hospital length of stay required 
     under subsection (a) may not be greater than such coinsurance 
     or cost-sharing for any preceding portion of such stay.
       (d) Level and Type of Reimbursements.--Nothing in this 
     section shall be construed to prevent a group health plan or 
     a health insurance issuer offering group health insurance 
     coverage from negotiating the level and type of reimbursement 
     with a provider for care provided in accordance with this 
     section.
       (e) Exception for Health Insurance Coverage in Certain 
     States.--
       (1) In general.--The requirements of this section shall not 
     apply with respect to health insurance coverage if there is a 
     State law (as defined in section 2723(d)(1) of the Public 
     Health Service Act) for a State that regulates such coverage 
     that is described in any of the following subparagraphs:
       (A) Such State law requires such coverage to provide for at 
     least a 48-hour hospital length of stay following a 
     mastectomy performed for treatment of breast cancer and at 
     least a 24-hour hospital length of stay following a lymph 
     node dissection for treatment of breast cancer.
       (B) Such State law requires, in connection with such 
     coverage for surgical treatment of breast cancer, that the 
     hospital length of stay for such care is left to the decision 
     of (or required to be made by) the attending provider in 
     consultation with the woman involved.
       (2) Construction.--Section 2723(a)(1) of the Public Health 
     Service Act and section 731(a)(1) of the Employee Retirement 
     Income Security Act of 1974 shall not be construed as 
     superseding a State law described in paragraph (1).

     SEC. __153. STANDARDS RELATING TO BENEFITS FOR RECONSTRUCTIVE 
                   BREAST SURGERY.

       (a) Requirements for Reconstructive Breast Surgery.--
       (1) In general.--A group health plan, and a health 
     insurance issuer offering group health insurance coverage, 
     that provides coverage for breast surgery in connection with 
     a mastectomy shall provide coverage for reconstructive breast 
     surgery resulting from the mastectomy. Such coverage shall 
     include coverage for all stages of reconstructive breast 
     surgery performed on a nondiseased breast to establish 
     symmetry with the diseased when reconstruction on the 
     diseased breast is performed and coverage of prostheses and 
     complications of mastectomy including lymphedema.
       (2) Reconstructive breast surgery defined.--In this 
     section, the term ``reconstructive breast surgery'' means 
     surgery performed as a result of a mastectomy to reestablish 
     symmetry between two breasts, and includes augmentation 
     mammoplasty, reduction mammoplasty, and mastopexy.
       (3) Mastectomy defined.--In this section, the term 
     ``mastectomy'' means the surgical removal of all or part of a 
     breast.
       (b) Prohibitions.--
       (1) Denial of coverage based on cosmetic surgery.--A group 
     health plan, and a health insurance issuer offering group 
     health insurance coverage in connection with a group health 
     plan, may not deny coverage described in subsection (a)(1) on 
     the basis that the coverage is for cosmetic surgery.
       (2) Application of similar prohibitions.--Paragraphs (2) 
     through (5) of section __152 shall apply under this section 
     in the same manner as they apply with respect to section 
     __152.
       (c) Rules of Construction.--
       (1) Nothing in this section shall be construed to require a 
     woman who is a participant or beneficiary to undergo 
     reconstructive breast surgery.
       (2) This section shall not apply with respect to any group 
     health plan, or any group health insurance coverage offered 
     by a health insurance issuer, which does not provide benefits 
     for mastectomies.
       (3) Nothing in this section shall be construed as 
     preventing a group health plan or issuer from imposing 
     deductibles, coinsurance, or other cost-sharing in relation 
     to benefits for reconstructive breast surgery under the plan 
     (or under health insurance coverage offered in connection 
     with a group health plan), except that such coinsurance or 
     other cost-sharing for any portion may not be greater than 
     such coinsurance or cost-sharing that is otherwise applicable 
     with respect to benefits for mastectomies.
       (e) Level and Type of Reimbursements.--Nothing in this 
     section shall be construed to prevent a group health plan or 
     a health insurance issuer offering group health insurance 
     coverage from negotiating the level and type of reimbursement 
     with a provider for care provided in accordance with this 
     section.

[[Page S7595]]

       (f) Exception for Health Insurance Coverage in Certain 
     States.--
       (1) In general.--The requirements of this section shall not 
     apply with respect to health insurance coverage if there is a 
     State law (as defined in section 2723(d)(1) of the Public 
     Health Service Act) for a State that regulates such coverage 
     and that requires coverage of at least the coverage of 
     reconstructive breast surgery otherwise required under this 
     section.
       (2) Construction.--Section 2723(a)(1) of the Public Health 
     Service Act and section 731(a)(1) of the Employee Retirement 
     Income Security Act of 1974 shall not be construed as 
     superseding a State law described in paragraph (1).

                         CHAPTER 7--DEFINITIONS

     SEC. __191. DEFINITIONS.

       (a) Incorporation of General Definitions.--The provisions 
     of section 2971 of the Public Health Service Act shall apply 
     for purposes of this subtitle in the same manner as they 
     apply for purposes of title XXVII of such Act.
       (b) Secretary.--Except as otherwise provided, the term 
     ``Secretary'' means the Secretary of Health and Human 
     Services, in consultation with the Secretary of Labor and the 
     Secretary of the Treasury and the term ``appropriate 
     Secretary'' means the Secretary of Health and Human Services 
     in relation to carrying out this subtitle under sections 2706 
     and 2751 of the Public Health Service Act, the Secretary of 
     Labor in relation to carrying out this subtitle under section 
     713 of the Employee Retirement Income Security Act of 1974, 
     and the Secretary of the Treasury in relation to carrying out 
     this subtitle under chapter 100 and section 4980D of the 
     Internal Revenue Code of 1986.
       (c) Additional Definitions.--For purposes of this subtitle:
       (1) Applicable authority.--The term ``applicable 
     authority'' means--
       (A) in the case of a group health plan, the Secretary of 
     Health and Human Services and the Secretary of Labor; and
       (B) in the case of a health insurance issuer with respect 
     to a specific provision of this subtitle, the applicable 
     State authority (as defined in section 2791(d) of the Public 
     Health Service Act), or the Secretary of Health and Human 
     Services, if such Secretary is enforcing such provision under 
     section 2722(a)(2) or 2761(a)(2) of the Public Health Service 
     Act.
       (2) Clinical peer.--The term ``clinical peer'' means, with 
     respect to a review or appeal, a physician (allopathic or 
     osteopathic) or other health care professional who holds a 
     non-restricted license in a State and who is appropriately 
     credentialed in the same or similar specialty as typically 
     manages the medical condition, procedure, or treatment under 
     review or appeal and includes a pediatric specialist where 
     appropriate; except that only a physician may be a clinical 
     peer with respect to the review or appeal of treatment 
     rendered by a physician.
       (3) Health care provider.--The term ``health care 
     provider'' includes a physician or other health care 
     professional, as well as an institutional provider of health 
     care services.
       (4) Nonparticipating.--The term ``nonparticipating'' means, 
     with respect to a health care provider that provides health 
     care items and services to a participant, beneficiary, or 
     enrollee under group health plan or health insurance 
     coverage, a health care provider that is not a participating 
     health care provider with respect to such items and services.
       (5) Participating.--The term ``participating'' mean, with 
     respect to a health care provider that provides health care 
     items and services to a participant, beneficiary, or enrollee 
     under group health plan or health insurance coverage offered 
     by a health insurance issuer, a health care provider that 
     furnishes such items and services under a contract or other 
     arrangement with the plan or issuer.

     SEC. __192. PREEMPTION; STATE FLEXIBILITY; CONSTRUCTION.

       (a) Continued Applicability of State Law With Respect to 
     Health Insurance Issuers.--
       (1) In general.--Subject to paragraph (2), this subtitle 
     shall not be construed to supersede any provision of State 
     law which establishes, implements, or continues in effect any 
     standard or requirement solely relating to health insurance 
     issuers in connection with group health insurance coverage 
     except to the extent that such standard or requirement 
     prevents the application of a requirement of this subtitle.
       (2) Continued preemption with respect to group health 
     plans.--Nothing in this subtitle shall be construed to affect 
     or modify the provisions of section 514 of the Employee 
     Retirement Income Security Act of 1974 with respect to group 
     health plans.
       (b) Rules of Construction.--Except as provided in sections 
     __152 and __153, nothing in this subtitle shall be construed 
     as requiring a group health plan or health insurance coverage 
     to provide specific benefits under the terms of such plan or 
     coverage.
       (c) Definitions.--For purposes of this section:
       (1) State law.--The term ``State law'' includes all laws, 
     decisions, rules, regulations, or other State action having 
     the effect of law, of any State. A law of the United States 
     applicable only to the District of Columbia shall be treated 
     as a State law rather than a law of the United States.
       (2) State.--The term ``State'' includes a State, the 
     Northern Mariana Islands, any political subdivisions of a 
     State or such Islands, or any agency or instrumentality of 
     either.

     SEC. __193. REGULATIONS.

       The Secretaries of Health and Human Services, Labor, and 
     the Treasury shall issue such regulations as may be necessary 
     or appropriate to carry out this subtitle. Such regulations 
     shall be issued consistent with section 104 of Health 
     Insurance Portability and Accountability Act of 1996. Such 
     Secretaries may promulgate any interim final rules as the 
     Secretaries determine are appropriate to carry out this 
     subtitle.
Subtitle B--Application of Patient Protection Standards to Group Health 
  Plans and Health Insurance Coverage Under Public Health Service Act

     SEC. __201. APPLICATION TO GROUP HEALTH PLANS AND GROUP 
                   HEALTH INSURANCE COVERAGE.

       (a) In General.--Subpart 2 of part A of title XXVII of the 
     Public Health Service Act is amended by adding at the end the 
     following new section:

     ``SEC. 2706. PATIENT PROTECTION STANDARDS.

       ``(a) In General.--Each group health plan shall comply with 
     patient protection requirements under subtitle A of the 
     Patients' Bill of Rights Act of 1998, and each health 
     insurance issuer shall comply with patient protection 
     requirements under such subtitle with respect to group health 
     insurance coverage it offers, and such requirements shall be 
     deemed to be incorporated into this subsection.
       ``(b) Notice.--A group health plan shall comply with the 
     notice requirement under section 711(d) of the Employee 
     Retirement Income Security Act of 1974 with respect to the 
     requirements referred to in subsection (a) and a health 
     insurance issuer shall comply with such notice requirement as 
     if such section applied to such issuer and such issuer were a 
     group health plan.''.
       (b) Conforming Amendment.--Section 2721(b)(1)(A) of such 
     Act (42 U.S.C. 300gg-21(b)(1)(A)) is amended by inserting 
     ``(other than section 2706)'' after ``requirements of such 
     subparts''.

     SEC. __202. APPLICATION TO INDIVIDUAL HEALTH INSURANCE 
                   COVERAGE.

       Part B of title XXVII of the Public Health Service Act is 
     amended by inserting after section 2751 the following new 
     section:

     ``SEC. 2752. PATIENT PROTECTION STANDARDS.

       ``(a) In General.--Each health insurance issuer shall 
     comply with patient protection requirements under subtitle A 
     of the Patients' Bill of Rights Act of 1998 with respect to 
     individual health insurance coverage it offers, and such 
     requirements shall be deemed to be incorporated into this 
     subsection.
       ``(b) Notice.--A health insurance issuer under this part 
     shall comply with the notice requirement under section 711(d) 
     of the Employee Retirement Income Security Act of 1974 with 
     respect to the requirements of such subtitle as if such 
     section applied to such issuer and such issuer were a group 
     health plan.''.
 Subtitle C--Amendments to the Employee Retirement Income Security Act 
                                of 1974

     SEC. __301. APPLICATION OF PATIENT PROTECTION STANDARDS TO 
                   GROUP HEALTH PLANS AND GROUP HEALTH INSURANCE 
                   COVERAGE UNDER THE EMPLOYEE RETIREMENT INCOME 
                   SECURITY ACT OF 1974.

       (a) In General.--Subpart B of part 7 of subtitle B of title 
     I of the Employee Retirement Income Security Act of 1974 is 
     amended by adding at the end the following new section:

     ``SEC. 713. PATIENT PROTECTION STANDARDS.

       ``(a) In General.--Subject to subsection (b), a group 
     health plan (and a health insurance issuer offering group 
     health insurance coverage in connection with such a plan) 
     shall comply with the requirements of subtitle A of the 
     Patients' Bill of Rights Act of 1998 (as in effect as of the 
     date of the enactment of such Act), and such requirements 
     shall be deemed to be incorporated into this subsection.
       ``(b) Plan Satisfaction of Certain Requirements.--
       ``(1) Satisfaction of certain requirements through 
     insurance.--For purposes of subsection (a), insofar as a 
     group health plan provides benefits in the form of health 
     insurance coverage through a health insurance issuer, the 
     plan shall be treated as meeting the following requirements 
     of subtitle A of the Patients' Bill of Rights Act of 1998 
     with respect to such benefits and not be considered as 
     failing to meet such requirements because of a failure of the 
     issuer to meet such requirements so long as the plan sponsor 
     or its representatives did not cause such failure by the 
     issuer:
       ``(A) section __101 (relating to access to emergency care).
       ``(B) Section __102(a)(1) (relating to offering option to 
     purchase point-of-service coverage), but only insofar as the 
     plan is meeting such requirement through an agreement with 
     the issuer to offer the option to purchase point-of-service 
     coverage under such section.
       ``(C) Section __103 (relating to choice of providers).
       ``(D) Section __104 (relating to access to specialty care).
       ``(E) Section __105(a)(1) (relating to continuity in case 
     of termination of provider contract) and section __105(a)(2) 
     (relating to continuity in case of termination of issuer 
     contract), but only insofar as a replacement

[[Page S7596]]

     issuer assumes the obligation for continuity of care.
       ``(F) section __106 (relating to coverage for individuals 
     participating in approved clinical trials.)
       ``(G) section __107 (relating to access to needed 
     prescription drugs).
       ``(H) Section __108 (relating to adequacy of provider 
     network).
       ``(I) Chapter 2 (relating to quality assurance).
       ``(J) Section __143 (relating to additional rules regarding 
     participation of health care professionals).
       ``(K) Section __152 (relating to standards relating to 
     benefits for certain breast cancer treatment).
       ``(L) Section __153 (relating to standards relating to 
     benefits for reconstructive breast surgery).
       ``(2) Information.--With respect to information required to 
     be provided or made available under section __121, in the 
     case of a group health plan that provides benefits in the 
     form of health insurance coverage through a health insurance 
     issuer, the Secretary shall determine the circumstances under 
     which the plan is not required to provide or make available 
     the information (and is not liable for the issuer's failure 
     to provide or make available the information), if the issuer 
     is obligated to provide and make available (or provides and 
     makes available) such information.
       ``(3) Grievance and internal appeals.--With respect to the 
     grievance system and internal appeals process required to be 
     established under sections __131 and __132, in the case of a 
     group health plan that provides benefits in the form of 
     health insurance coverage through a health insurance issuer, 
     the Secretary shall determine the circumstances under which 
     the plan is not required to provide for such system and 
     process (and is not liable for the issuer's failure to 
     provide for such system and process), if the issuer is 
     obligated to provide for (and provides for) such system and 
     process.
       ``(4) External appeals.--Pursuant to rules of the 
     Secretary, insofar as a group health plan enters into a 
     contract with a qualified external appeal entity for the 
     conduct of external appeal activities in accordance with 
     section __133, the plan shall be treated as meeting the 
     requirement of such section and is not liable for the 
     entity's failure to meet any requirements under such section.
       ``(5) Application to prohibitions.--Pursuant to rules of 
     the Secretary, if a health insurance issuer offers health 
     insurance coverage in connection with a group health plan and 
     takes an action in violation of any of the following 
     sections, the group health plan shall not be liable for such 
     violation unless the plan caused such violation:
       ``(A) Section __109 (relating to nondiscrimination in 
     delivery of services).
       ``(B) Section __141 (relating to prohibition of 
     interference with certain medical communications).
       ``(C) Section __142 (relating to prohibition against 
     transfer of indemnification or improper incentive 
     arrangements).
       ``(D) Section __144 (relating to prohibition on 
     retaliation).
       ``(E) Section __151 (relating to promoting good medical 
     practice).
       ``(6) Construction.--Nothing in this subsection shall be 
     construed to affect or modify the responsibilities of the 
     fiduciaries of a group health plan under part 4 of subtitle 
     B.
       ``(7) Application to certain prohibitions against 
     retaliation.--With respect to compliance with the 
     requirements of section __144(b)(1) of the Patients' Bill of 
     Rights Act of 1998, for purposes of this subtitle the term 
     `group health plan' is deemed to include a reference to an 
     institutional health care provider.
       ``(c) Enforcement of Certain Requirements.--
       ``(1) Complaints.--Any protected health care professional 
     who believes that the professional has been retaliated or 
     discriminated against in violation of section __144(b)(1) of 
     the Patients' Bill of Rights Act of 1998 may file with the 
     Secretary a complaint within 180 days of the date of the 
     alleged retaliation or discrimination.
       ``(2) Investigation.--The Secretary shall investigate such 
     complaints and shall determine if a violation of such section 
     has occurred and, if so, shall issue an order to ensure that 
     the protected health care professional does not suffer any 
     loss of position, pay, or benefits in relation to the plan, 
     issuer, or provider involved, as a result of the violation 
     found by the Secretary.
       ``(d) Conforming Regulations.--The Secretary may issue 
     regulations to coordinate the requirements on group health 
     plans under this section with the requirements imposed under 
     the other provisions of this title.''.
       (b) Satisfaction of ERISA Claims Procedure Requirement.--
     Section 503 of such Act (29 U.S.C. 1133) is amended by 
     inserting ``(a)'' after ``Sec. 503.'' and by adding at the 
     end the following new subsection:
       ``(b) In the case of a group health plan (as defined in 
     section 733) compliance with the requirements of chapter 4 
     (and section __115) of subtitle A of the Patients' Bill of 
     Rights Act of 1998 in the case of a claims denial shall be 
     deemed compliance with subsection (a) with respect to such 
     claims denial.''.
       (c) Conforming Amendments.--(1) Section 732(a) of such Act 
     (29 U.S.C. 1185(a)) is amended by striking ``section 711'' 
     and inserting ``sections 711 and 713''.
       (2) The table of contents in section 1 of such Act is 
     amended by inserting after the item relating to section 712 
     the following new item:

``Sec. 713. Patient protection standards.''.
       (3) Section 502(b)(3) of such Act (29 U.S.C. 1132(b)(3)) is 
     amended by inserting ``(other than section 144(b))'' after 
     ``part 7''.

     SEC. __302. ERISA PREEMPTION NOT TO APPLY TO CERTAIN ACTIONS 
                   INVOLVING HEALTH INSURANCE POLICYHOLDERS.

       (a) In General.--Section 514 of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1144) is amended by 
     adding at the end the following subsection:
       ``(e) Preemption Not To Apply to Certain Actions Arising 
     Out of Provision of Health Benefits.--
       ``(1) In general.--Except as provided in this subsection, 
     nothing in this title shall be construed to invalidate, 
     impair, or supersede any cause of action brought by a plan 
     participant or beneficiary (or the estate of a plan 
     participant or beneficiary) under State law to recover 
     damages resulting from personal injury or for wrongful death 
     against any person--
       ``(A) in connection with the provision of insurance, 
     administrative services, or medical services by such person 
     to or for a group health plan (as defined in section 733), or
       ``(B) that arises out of the arrangement by such person for 
     the provision of such insurance, administrative services, or 
     medical services by other persons.

     For purposes of this subsection, the term `personal injury' 
     means a physical injury and includes an injury arising out of 
     the treatment (or failure to treat) a mental illness or 
     disease.
       ``(2) Exception for employers and other plan sponsors.--
       ``(A) In general.--Subject to subparagraph (B), paragraph 
     (1) does not authorize--
       ``(i) any cause of action against an employer or other plan 
     sponsor maintaining the group health plan (or against an 
     employee of such an employer or sponsor acting within the 
     scope of employment), or
       ``(ii) a right of recovery or indemnity by a person against 
     an employer or other plan sponsor (or such an employee) for 
     damages assessed against the person pursuant to a cause of 
     action under paragraph (1).
       ``(B) Special rule.--Subparagraph (A) shall not preclude 
     any cause of action described in paragraph (1) against an 
     employer or other plan sponsor (or against an employee of 
     such an employer or sponsor acting within the scope of 
     employment) if--
       ``(i) such action is based on the employer's or other plan 
     sponsor's (or employee's) exercise of discretionary authority 
     to make a decision on a claim for benefits covered under the 
     plan or health insurance coverage in the case at issue; and
       ``(ii) the exercise by such employer or other plan sponsor 
     (or employee) of such authority resulted in personal injury 
     or wrongful death.
       ``(3) Construction.--Nothing in this subsection shall be 
     construed as permitting a cause of action under State law for 
     the failure to provide an item or service which is not 
     covered under the group health plan involved.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to acts and omissions occurring on or after the 
     date of the enactment of this title from which a cause of 
     action arises.
   Subtitle D--Application to Group Health Plans Under the Internal 
                         Revenue Code of 1986.

     SEC. __401. AMENDMENTS TO THE INTERNAL REVENUE CODE OF 1986.

       Subchapter B of chapter 100 of the Internal Revenue Code of 
     1986 (as amended by section 1531(a) of the Taxpayer Relief 
     Act of 1997) is amended--
       (1) in the table of sections, by inserting after the item 
     relating to section 9812 the following new item:

``Sec. 9813. Standard relating to patient freedom of choice.''; and
       (2) by inserting after section 9812 the following:

     ``SEC. 9813. STANDARD RELATING TO PATIENTS' BILL OF RIGHTS.

       ``A group health plan shall comply with the requirements of 
     subtitle A of the Patients' Bill of Rights Act of 1998 (as in 
     effect as of the date of the enactment of such Act), and such 
     requirements shall be deemed to be incorporated into this 
     section.''.
      Subtitle E--Effective Dates; Coordination in Implementation

     SEC. __501. EFFECTIVE DATES.

       (a) Group Health Coverage.--
       (1) In general.--Subject to paragraph (2), the amendments 
     made by sections 2201(a) and 2301 (and subtitle A insofar as 
     it relates to such sections) shall apply with respect to 
     group health plans, and health insurance coverage offered in 
     connection with group health plans, for plan years beginning 
     on or after July 1, 1999 (in this section referred to as the 
     ``general effective date'').
       (2) Treatment of collective bargaining agreements.--In the 
     case of a group health plan maintained pursuant to 1 or more 
     collective bargaining agreements between employee 
     representatives and 1 or more employers ratified before the 
     date of enactment of this title, the amendments made by 
     sections 2201(a) and 2301 (and subtitle A insofar as it 
     relates to such sections) shall not apply to plan years 
     beginning before the later of--

[[Page S7597]]

       (A) the date on which the last collective bargaining 
     agreements relating to the plan terminates (determined 
     without regard to any extension thereof agreed to after the 
     date of enactment of this title), or
       (B) the general effective date.
     For purposes of subparagraph (A), any plan amendment made 
     pursuant to a collective bargaining agreement relating to the 
     plan which amends the plan solely to conform to any 
     requirement added by this title shall not be treated as a 
     termination of such collective bargaining agreement.
       (b) Individual Health Insurance Coverage.--The amendments 
     made by section __202 shall apply with respect to individual 
     health insurance coverage offered, sold, issued, renewed, in 
     effect, or operated in the individual market on or after the 
     general effective date.

     SEC. __502. COORDINATION IN IMPLEMENTATION.

       Section 104(1) of Health Insurance Portability and 
     Accountability Act of 1996 is amended by inserting ``or under 
     subtitle A of the Patients' Bill of Rights Act of 1998 (and 
     the amendments made by such title)'' after ``section 401)''.

     SEC. __503. NO IMPACT ON SOCIAL SECURITY TRUST FUND.

       Nothing in this title shall be construed to alter or amend 
     the Social Security Act (or any regulation promulgated under 
     that Act). To the extent that this title may have a negative 
     effect on the balances of any trust fund established under 
     the Social Security Act, such sums as may be necessary shall 
     be transferred from the general revenues of the Federal 
     Government to ensure that the income and balances of such 
     trust funds are not reduced as a result of the enactment of 
     this title.
                          Subtitle F--Revenue

     SEC. __601. EXTENSION OF HAZARDOUS SUBSTANCE SUPERFUND TAXES.

       (a) Extension of Taxes.--
       (1) Environmental tax.--Section 59A(e) of the Internal 
     Revenue Code of 1986 is amended to read as follows:
       ``(e) Application of Tax.--The tax imposed by this section 
     shall apply to taxable years beginning after December 31, 
     1986, and before January 1, 1996, and to taxable years 
     beginning after December 31, 1999, and before January 1, 
     2009.''
       (2) Excise taxes.--Section 4611(e) of such Code is amended 
     to read as follows:
       ``(e) Application of Hazardous Substance Superfund 
     Financing Rate.--The Hazardous Substance Superfund financing 
     rate under this section shall apply after December 31, 1986, 
     and before January 1, 1996, and after December 31, 1999, and 
     before October 1, 2008.''
       (b) Effective Dates.--
       (1) Income tax.--The amendment made by subsection (a)(1) 
     shall apply to taxable years beginning after December 31, 
     1999.
       (2) Excise tax.--The amendment made by subsection (a)(2) 
     shall take effect on January 1, 2000.

     SEC. __602. CLARIFICATION OF DEFINITION OF SPECIFIED 
                   LIABILITY LOSS.

       (a) In General.--Subparagraph (B) of section 172(f)(1) of 
     the Internal Revenue Code of 1986 (defining specified 
     liability loss) is amended to read as follows:
       ``(B) Any amount (not described in subparagraph (A)) 
     allowable as a deduction under this chapter which is 
     attributable to a liability--
       ``(i) under a Federal or State law requiring the 
     reclamation of land, decommissioning of a nuclear power plant 
     (or any unit thereof), dismantlement of an offshore drilling 
     platform, remediation of environmental contamination, or 
     payment of workmen's compensation, and
       ``(ii) with respect to which the act (or failure to act) 
     giving rise to such liability occurs at least 3 years before 
     the beginning of the taxable year.''
       (b) Effective Date.--The amendment made by this section 
     shall apply to net operating losses for taxable years 
     beginning after the date of the enactment of this Act.

     SEC. __603. PROPERTY SUBJECT TO A LIABILITY TREATED IN SAME 
                   MANNER AS ASSUMPTION OF LIABILITY.

       (a) Repeal of Property Subject to a Liability Test.--
       (1) Section 357.--Section 357(a) of the Internal Revenue 
     Code of 1986 (relating to assumption of liability) is amended 
     by striking ``, or acquires from the taxpayer property 
     subject to a liability'' in paragraph (2).
       (2) Section 358.--Section 358(d)(1) of such Code (relating 
     to assumption of liability) is amended by striking ``or 
     acquired from the taxpayer property subject to a liability''.
       (3) Section 368.--
       (A) Section 368(a)(1)(C) of such Code is amended by 
     striking ``, or the fact that property acquired is subject to 
     a liability,''.
       (B) The last sentence of section 368(a)(2)(B) of such Code 
     is amended by striking ``, and the amount of any liability to 
     which any property acquired from the acquiring corporation is 
     subject,''.
       (b) Clarification of Assumption of Liability.--Section 
     357(c) of the Internal Revenue Code of 1986 is amended by 
     adding at the end the following new paragraph:
       ``(4) Determination of amount of liability assumed.--For 
     purposes of this section, section 358(d), section 
     368(a)(1)(C), and section 368(a)(2)(B)--
       ``(A) a liability shall be treated as having been assumed 
     to the extent, as determined on the basis of facts and 
     circumstances, the transferor is relieved of such liability 
     or any portion thereof (including through an indemnity 
     agreement or other similar arrangement), and
       ``(B) in the case of the transfer of any property subject 
     to a nonrecourse liability, unless the facts and 
     circumstances indicate otherwise, the transferee shall be 
     treated as assuming with respect to such property a ratable 
     portion of such liability determined on the basis of the 
     relative fair market values (determined without regard to 
     section 7701(g)) of all assets subject to such liability.
       (c) Application to Provisions Other Than Subchapter C.--
       (1) Section 584.--Section 584(h)(3) of the Internal Revenue 
     Code of 1986 is amended--
       (A) by striking ``, and the fact that any property 
     transferred by the common trust fund is subject to a 
     liability,'' in subparagraph (A),
       (B) by striking clause (ii) of subparagraph (B) and 
     inserting:
       ``(ii) Assumed liabilities.--For purposes of clause (i), 
     the term `assumed liabilities' means any liability of the 
     common trust fund assumed by any regulated investment company 
     in connection with the transfer referred to in paragraph 
     (1)(A).
       ``(C) Assumption.--For purposes of this paragraph, in 
     determining the amount of any liability assumed, the rules of 
     section 357(c)(4) shall apply.''
       (2) Section 1031.--The last sentence of section 1031(d) of 
     such Code is amended--
       (A) by striking ``assumed a liability of the taxpayer or 
     acquired from the taxpayer property subject to a liability'' 
     and inserting ``assumed (as determined under section 
     357(c)(4)) a liability of the taxpayer'', and
       (B) by striking ``or acquisition (in the amount of the 
     liability)''.
       (d) Conforming Amendments.--
       (1) Section 351(h)(1) of the Internal Revenue Code of 1986 
     is amended by striking ``, or acquires property subject to a 
     liability,''.
       (2) Section 357 of such Code is amended by striking ``or 
     acquisition'' each place it appears in subsection (a) or (b).
       (3) Section 357(b)(1) of such Code Is amended by striking 
     ``or acquired''.
       (4) Section 357(c)(1) of such Code is amended by striking 
     ``, plus the amount of the liabilities to which the property 
     is subject,''.
       (5) Section 357(c)(3) of such Code is amended by striking 
     ``or to which the property transferred is subject''.
       (6) Section 358(d)(1) of such Code is amended by striking 
     ``or acquisition (in the amount of the liability)''.
       (e) Effective Date.--The amendments made by this section 
     shall apply to transfers after the date of the enactment of 
     this Act.

     SEC. __604. EXCISE TAX ON PURCHASE OF STRUCTURED SETTLEMENT 
                   AGREEMENTS.

       (a) In General.--Subtitle D of the Internal Revenue Code of 
     1986 (relating to miscellaneous excise taxes) is amended by 
     adding at the end the following:

             ``CHAPTER 48--STRUCTURED SETTLEMENT AGREEMENTS

``Sec. 5000A. Tax on purchases of structured settlement agreements.

     ``SEC. 5000A. TAX ON PURCHASES OF STRUCTURED SETTLEMENT 
                   AGREEMENTS.

       ``(a) Imposition of Tax.--There is hereby imposed on any 
     person who purchases the right to receive payments under a 
     structured settlement agreement a tax equal to 10 percent of 
     the amount of the purchase price.
       ``(b) Exception for Court-Ordered Purchases.--Subsection 
     (a) shall not apply to any purchase which is pursuant to a 
     court order which finds that such purchase is necessary 
     because of the extraordinary and unanticipated needs of the 
     individual with the personal injuries or sickness giving rise 
     to the structured settlement agreement.
       ``(c) Structured Settlement Agreement.--For purposes of 
     this section, the term `structured settlement agreement' 
     means--
       ``(1) any right to receive (whether by suit or agreement) 
     periodic payments as damages on account of personal injuries 
     or sickness, or
       ``(2) any right to receive periodic payments as 
     compensation for personal injuries or sickness under any 
     workmen's compensation act.
       ``(d) Purchase.--For purposes of this section, the term 
     `purchase' has the meaning given such term by section 
     179(d)(2).''
       (b) Conforming Amendment.--The table of chapters for 
     subtitle D of the Internal Revenue Code of 1986 is amended by 
     adding at the end the following:

``Chapter 48. Structured settlement agreements.''
       (c) Effective Date.--The amendments made by this section 
     shall apply to purchases after the date of enactment of this 
     Act.

     SEC. __605. CLARIFICATION AND EXPANSION OF MATHEMATICAL ERROR 
                   ASSESSMENT PROCEDURES.

       (a) TIN Deemed Incorrect if Information on Return Differs 
     With Agency Records.--Section 6213(g)(2) of the Internal 
     Revenue Code of 1986 (defining mathematical or clerical 
     error) is amended by adding at the end the following flush 
     sentence:

     ``A taxpayer shall be treated as having omitted a correct TIN 
     for purposes of the preceding sentence if information 
     provided by the taxpayer on the return with respect to the 
     individual whose TIN was provided differs from the 
     information the Secretary obtains from the person issuing the 
     TIN.''
       (b) Expansion of Mathematical Error Procedures to Cases 
     Where TIN Establishes Individual Not Eligible for Tax

[[Page S7598]]

     Credit.--Section 6213(g)(2) of the Internal Revenue Code of 
     1986 is amended by striking ``and'' at the end of 
     subparagraph (I), by striking the period at the end of the 
     first subparagraph (J) (relating to higher education credit) 
     and inserting a comma, by redesignating the second 
     subparagraph (J) (relating to earned income credit) as 
     subparagraph (K) and by striking the period at the end and 
     inserting ``, and'', and by adding at the end the following 
     new subparagraph:
       ``(L) the inclusion of a TIN on a return with respect to an 
     individual for whom a credit is claimed under section 21, 24, 
     or 32 if, on the basis of data obtained by the Secretary from 
     the person issuing the TIN, it is established that the 
     individual does not meet any applicable age requirements for 
     such credit.''
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years ending after the date of the 
     enactment of this Act.

     SEC. __606. MODIFICATION TO FOREIGN TAX CREDIT CARRYBACK AND 
                   CARRYOVER PERIODS.

       (a) In General.--Section 904(c) of the Internal Revenue 
     Code of 1986 (relating to limitation on credit) is amended--
       (1) by striking ``in the second preceding taxable year,'', 
     and
       (2) by striking ``or fifth'' and inserting ``fifth, sixth, 
     or seventh''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to credits arising in taxable years beginning 
     after December 31, 2001.

     SEC. __607. DEPOSIT REQUIREMENTS FOR FUTA TAXES.

       (a) In General.--Section 6157 of the Internal Revenue Code 
     of 1986 (relating to payment of Federal unemployment tax on 
     quarterly or other time period basis) is amended by adding at 
     the end the following new subsection:
       ``(d) Deposits of FUTA Taxes.--
       ``(1) General rule.--Except as otherwise provided in this 
     subsection or in regulations prescribed by the Secretary, the 
     taxes imposed by section 3301 which are attributable to wages 
     paid during any calendar quarter shall be deposited on or 
     before the last day of the first month following the close of 
     such calendar quarter.
       ``(2) Monthly deposit rule.--
       ``(A) In general.--In the case of a monthly depositor for 
     any calendar year, the taxes imposed by section 3301 which 
     are attributable to wages paid during any month in such 
     calendar year shall be deposited on or before the last day of 
     the following month.
       ``(B) Monthly depositor.--For purposes of subparagraph (A), 
     an employer is a monthly depositor for any calendar year if 
     the employer's liability for taxes imposed by section 3301 
     for the preceding calendar year was equal to or greater than 
     $1,100. All persons treated as one employer under subsection 
     (a) or (b) shall be treated as one employer for purposes of 
     this subparagraph.
       ``(C) Safe harbor for monthly depositors.--No penalties 
     shall be imposed under this title with respect to--
       ``(i) deposits required under this paragraph for the first 
     month of a calendar quarter if the amount deposited by the 
     last day of the second month of such quarter is at least 
     equal to the lesser of--

       ``(I) 30 percent of the taxes imposed by section 3301 which 
     are attributable to wages paid during such quarter, or
       ``(II) 90 percent of the taxes imposed by section 3301 
     which are attributable to wages paid during the first month 
     of such quarter, and

       ``(ii) deposits required under this paragraph for the 
     second month of a calendar quarter if the amount deposited by 
     the last day of the third month of such quarter is at least 
     equal to the lesser of--

       ``(I) 60 percent of the taxes imposed by section 3301 which 
     are attributable to wages paid during such quarter, or
       ``(II) 90 percent of the taxes imposed by section 3301 
     which are attributable to wages paid during the first 2 
     months of such quarter.

       ``(3) Deposit required only on banking days.--If taxes are 
     required to be deposited under this subsection on any day 
     which is not a banking day, such taxes shall be treated as 
     timely deposited if deposited on the first banking day 
     thereafter.
       ``(4) Wages.--For purposes of this subsection, the term 
     `wages' has the meaning given to such term by section 
     3306(b).''
       (b) Application to Deposits Required by State 
     Governments.--
       (1) In general.--Section 303 of the Social Security Act (42 
     U.S.C. 503) is amended by adding at the end the following new 
     subsection:
       ``(k)(1) The State agency charged with the administration 
     of the State law shall provide that any deposit required 
     under the State law to the unemployment fund of the State 
     with respect to wages paid for any month during a calendar 
     year by an employer is required to be made by the last day of 
     the following month if such employer is treated as a monthly 
     depositor for such calendar year for purposes of section 
     6157(d) of the Internal Revenue Code of 1986 (or if the State 
     so elects, at such other time as is not later than the time 
     provided under subparagraph (C) of section 6157(d)(2) of such 
     Code).
       ``(2) Whenever the Secretary of Labor, after reasonable 
     notice and opportunity for hearing to the State agency 
     charged with the administration of State law, finds that 
     there is a failure to comply substantially with the 
     requirements of paragraph (1), the Secretary of Labor shall 
     notify such State agency that further payments will not be 
     made to the State until the Secretary is satisfied that there 
     is no longer any such failure. Until the Secretary of Labor 
     is so satisfied, he shall make no further certification to 
     the Secretary of the Treasury with respect to such State.''
       (2) Conforming amendment.--Section 304(a)(2) of the Social 
     Security Act (42 U.S.C. 504(a)(2)) is amended by striking 
     ``or (j)'' and inserting ``(j), or (k)''.
       (c) Conforming Amendments.--
       (1) The last sentence of section 6157(a) of the Internal 
     Revenue Code of 1986 is amended by striking ``and such 
     time''.
       (2) Section 6157(b) of such Code is amended by striking 
     ``referred to in paragraph (1) or (2) of subsection (a)''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to months beginning after December 31, 2003.

     SEC. __608. INFORMATION REQUIREMENTS.

       (a) Information From Group Health Plans.--Section 1862(b) 
     of the Social Security Act (42 U.S.C. 1395y(b)) is amended by 
     adding at the end the following:
       ``(7) Information from group health plans.--
       ``(A) Provision of information by group health plans.--The 
     administrator of a group health plan subject to the 
     requirements of paragraph (1) shall provide to the Secretary 
     such of the information elements described in subparagraph 
     (C) as the Secretary specifies, and in such manner and at 
     such times as the Secretary may specify (but not more 
     frequently than four times per year), with respect to each 
     individual covered under the plan who is entitled to any 
     benefits under this title.
       ``(B) Provision of information by employers and employee 
     organizations.--An employer (or employee organization) that 
     maintains or participates in a group health plan subject to 
     the requirements of paragraph (1) shall provide to the 
     administrator of the plan such of the information elements 
     required to be provided under subparagraph (A), and in such 
     manner and at such times as the Secretary may specify, at a 
     frequency consistent with that required under subparagraph 
     (A) with respect to each individual described in subparagraph 
     (A) who is covered under the plan by reason of employment 
     with that employer or membership in the organization.
       ``(C) Information elements.--The information elements 
     described in this subparagraph are the following:
       ``(i) Elements concerning the individual.--

       ``(I) The individual's name.
       ``(II) The individual's date of birth.
       ``(III) The individual's sex.
       ``(IV) The individual's social security insurance number.
       ``(V) The number assigned by the Secretary to the 
     individual for claims under this title.
       ``(VI) The family relationship of the individual to the 
     person who has or had current or employment status with the 
     employer.

       ``(ii) Elements concerning the family member with current 
     or former employment status.--

       ``(I) The name of the person in the individual's family who 
     has current or former employment status with the employer.
       ``(II) That person's social security insurance number.
       ``(III) The number or other identifier assigned by the plan 
     to that person.
       ``(IV) The periods of coverage for that person under the 
     plan.

       ``(V) The employment status of that person (current or 
     former) during those periods of coverage.
       ``(VI) The classes (of that person's family members) 
     covered under the plan.

       ``(iii) Plan elements.--

       ``(I) The items and services covered under the plan.
       ``(II) The name and address to which claims under the plan 
     are to be sent.

       ``(iv) Elements concerning the employer.--

       ``(I) The employer's name.
       ``(II) The employer's address.
       ``(III) The employer identification number of the employer.

       ``(D) Use of identifiers.--The administrator of a group 
     health plan shall utilize a unique identifier for the plan in 
     providing information under subparagraph (A) and in other 
     transactions, as may be specified by the Secretary, related 
     to the provisions of this subsection. The Secretary may 
     provide to the administrator the unique identifier described 
     in the preceding sentence.
       ``(E) Penalty for noncompliance.--Any entity that knowingly 
     and willfully fails to comply with a requirement imposed by 
     the previous subparagraphs shall be subject to a civil money 
     penalty not to exceed $1,000 for each incident of such 
     failure. The provisions of section 1128A (other than 
     subsections (a) and (b)) shall apply to a civil money penalty 
     under the previous sentence in the same manner as those 
     provisions apply to a penalty or proceeding under section 
     1128A(a).''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect 180 days after the date of enactment of 
     this Act.
                                 ______
                                 

                  PRODUCT LIABILITY REFORM ACT OF 1998


                        LOTT AMENDMENT NO. 3064

  Mr. LOTT proposed an amendment to the bill, S. 648, supra; as 
follows:


[[Page S7599]]


       Strike all after the enacting clause and insert the 
     following:

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Product 
     Liability Reform Act of 1998''.
       (b) Table of Contents.--The table of contents for this Act 
     is as follows:

Sec. 1. Short title; table of contents.
Sec. 2. Findings; purposes.

                   TITLE I--PRODUCT LIABILITY REFORM

Sec. 101. Definitions.
Sec. 102. Applicability; preemption.
Sec. 103. Liability rules applicable to product sellers, renters, and 
              lessors.
Sec. 104. Defense based on claimant's use of alcohol or drugs.
Sec. 105. Reduction in damages for misuse or alteration.
Sec. 106. Statute of limitations.
Sec. 107. Statute of repose for durable goods used in a trade or 
              business.
Sec. 108. Transitional provision relating to extension of period for 
              bringing certain actions.
Sec. 109. Alternative dispute resolution procedures.
Sec. 110. Punitive damages reforms.
Sec. 111. Liability for certain claims relating to death.
Sec. 112. Workers' compensation subrogation.

                TITLE II--BIOMATERIALS ACCESS ASSURANCE

Sec. 201. Short title.
Sec. 202. Findings.
Sec. 203. Definitions.
Sec. 204. General requirements; applicability; preemption.
Sec. 205. Liability of biomaterials suppliers.
Sec. 206. Procedures for dismissal of civil actions against 
              biomaterials suppliers.
Sec. 207. Subsequent impleader of dismissed defendant.

        TITLE III--LIMITATIONS ON APPLICABILITY; EFFECTIVE DATE

Sec. 301. Federal cause of action precluded.
Sec. 302. Effective date.

     SEC. 2. FINDINGS; PURPOSES.

       (a) Findings.--Congress finds that--
       (1) although damage awards in product liability actions can 
     encourage the production of safer products, they also can 
     have a direct effect on interstate commerce and our Nation's 
     consumers by, among other things, increasing the cost and 
     decreasing the availability of products;
       (2) some of the rules of law governing product liability 
     actions are inconsistent within and among the States, 
     resulting in differences in State laws that can be 
     inequitable to both plaintiffs and defendants and can impose 
     burdens on interstate commerce;
       (3) product liability awards can jeopardize the financial 
     well-being of individuals and industries, particularly the 
     Nation's small businesses;
       (4) because the product liability laws of one State can 
     have adverse effects on consumers and businesses in many 
     other States, it is appropriate for the Federal Government to 
     enact national, uniform product liability laws that preempt 
     State laws; and
       (5) it is the constitutional role of the Federal Government 
     to remove barriers to interstate commerce.
       (b) Purposes.--Based on the powers under clause 3 of 
     section 8 of article I of the United States Constitution, the 
     purposes of this Act are to promote the free flow of goods 
     and services and to lessen burdens on interstate commerce 
     by--
       (1) establishing certain uniform legal principles of 
     product liability that provide a fair balance among the 
     interests of product users, manufacturers, and product 
     sellers;
       (2) providing for reasonable standards concerning, and 
     limits on, punitive damages over and above the actual damages 
     suffered by a claimant;
       (3) ensuring the fair allocation of liability in product 
     liability actions;
       (4) reducing the unacceptable costs and delays in product 
     liability actions caused by excessive litigation that harm 
     both plaintiffs and defendants;
       (5) establishing greater fairness, rationality, and 
     predictability in product liability actions; and
       (6) providing fair and expeditious judicial procedures that 
     are necessary to complement and effectuate the legal 
     principles established by this Act.
                   TITLE I--PRODUCT LIABILITY REFORM

     SEC. 101. DEFINITIONS.

       In this title:
       (1) Alcoholic product.--The term ``alcoholic product'' 
     includes any product that contains not less than \1/2\ of 1 
     percent of alcohol by volume and is intended for human 
     consumption.
       (2) Claimant.--The term ``claimant'' means any person who 
     brings an action covered by this title and any person on 
     whose behalf such an action is brought. If such an action is 
     brought through or on behalf of an estate, the term includes 
     the claimant's decedent. If such an action is brought through 
     or on behalf of a minor or incompetent, the term includes the 
     claimant's legal guardian.
       (3) Claimant's benefits.--The term ``claimant's benefits'' 
     means the amount paid to an employee as workers' compensation 
     benefits.
       (4) Clear and convincing evidence.--The term ``clear and 
     convincing evidence'' is 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 that 
     standard is more than that required under a preponderance of 
     the evidence, but less than that required for proof beyond a 
     reasonable doubt.
       (5) Commercial loss.--The term ``commercial loss'' means--
       (A) any loss or damage solely to a product itself;
       (B) loss relating to a dispute over the value of a product; 
     or
       (C) consequential economic loss.
       (6) Compensatory damages.--The term ``compensatory 
     damages'' means damages awarded for economic and noneconomic 
     loss.
       (7) Dram-shop.--The term ``dram-shop'' means a drinking 
     establishment where alcoholic products are sold to be 
     consumed on the premises.
       (8) Durable good.--The term ``durable good'' means any 
     product, or any component of any such product, which--
       (A)(i) has a normal life expectancy of 3 or more years; or
       (ii) is of a character subject to allowance for 
     depreciation under the Internal Revenue Code of 1986; and
       (B) is--
       (i) used in a trade or business;
       (ii) held for the production of income; or
       (iii) sold or donated to a governmental or private entity 
     for the production of goods, training, demonstration, or any 
     other similar purpose.
       (9) Economic loss.--The term ``economic loss'' means any 
     pecuniary loss resulting from harm (including the loss of 
     earnings or other benefits related to employment, medical 
     expense loss, replacement services loss, loss due to death, 
     burial costs, and loss of business or employment 
     opportunities) to the extent recovery for that loss is 
     allowed under applicable State law.
       (10) Harm.--The term ``harm''--
       (A) means any physical injury, illness, disease, or death, 
     or damage to property caused by a product; and
       (B) does not include commercial loss.
       (11) Insurer.--The term ``insurer'' means the employer of a 
     claimant if the employer is self-insured or if the employer 
     is not self-insured, the workers' compensation insurer of the 
     employer.
       (12) Manufacturer.--The term ``manufacturer'' means--
       (A) any person who is engaged in a business to produce, 
     create, make, or construct any product (or component part of 
     a product) and who--
       (i) designs or formulates the product (or component part of 
     the product); or
       (ii) has engaged another person to design or formulate the 
     product (or component part of the product);
       (B) a product seller, but only with respect to those 
     aspects of a product (or component part of a product) which 
     are created or affected when, before placing the product in 
     the stream of commerce, the product seller--
       (i) produces, creates, makes, constructs and designs, or 
     formulates an aspect of the product (or component part of the 
     product) made by another person; or
       (ii) has engaged another person to design or formulate an 
     aspect of the product (or component part of the product) made 
     by another person; or
       (C) any product seller not described in subparagraph (B) 
     which holds itself out as a manufacturer to the user of the 
     product.
       (13) Noneconomic loss.--The term ``noneconomic loss'' means 
     subjective, nonmonetary loss resulting from harm, including 
     pain, suffering, inconvenience, mental suffering, emotional 
     distress, loss of society and companionship, loss of 
     consortium, injury to reputation, and humiliation.
       (14) Person.--The term ``person'' means any individual, 
     corporation, company, association, firm, partnership, 
     society, joint stock company, or any other entity (including 
     any governmental entity).
       (15) Product.--
       (A) In general.--The term ``product'' means any object, 
     substance, mixture, or raw material in a gaseous, liquid, or 
     solid state that--
       (i) is capable of delivery itself or as an assembled whole, 
     in a mixed or combined state, or as a component part or 
     ingredient;
       (ii) is produced for introduction into trade or commerce;
       (iii) has intrinsic economic value; and
       (iv) is intended for sale or lease to persons for 
     commercial or personal use.
       (B) Exclusion.--The term ``product'' does not include--
       (i) tissue, organs, blood, and blood products used for 
     therapeutic or medical purposes, except to the extent that 
     such tissue, organs, blood, and blood products (or the 
     provision thereof) are subject, under applicable State law, 
     to a standard of liability other than negligence; or
       (ii) electricity, water delivered by a utility, natural 
     gas, or steam.
       (16) Product liability action.--The term ``product 
     liability action'' means a civil action brought on any theory 
     for harm caused by a product.
       (17) Product seller.--
       (A) In general.--The term ``product seller'' means a person 
     who in the course of a business conducted for that purpose--
       (i) sells, distributes, rents, leases, prepares, blends, 
     packages, labels, or otherwise is involved in placing a 
     product in the stream of commerce; or
       (ii) installs, repairs, refurbishes, reconditions, or 
     maintains the harm-causing aspect of the product.

[[Page S7600]]

       (B) Exclusion.--The term ``product seller'' does not 
     include--
       (i) a seller or lessor of real property;
       (ii) a provider of professional services in any case in 
     which the sale or use of a product is incidental to the 
     transaction and the essence of the transaction is the 
     furnishing of judgment, skill, or services; or
       (iii) any person who--

       (I) acts in only a financial capacity with respect to the 
     sale of a product; or
       (II) leases a product under a lease arrangement in which 
     the lessor does not initially select the leased product and 
     does not during the lease term ordinarily control the daily 
     operations and maintenance of the product.

       (18) Punitive damages.--The term ``punitive damages'' means 
     damages awarded against any person or entity to punish or 
     deter that person or entity, or others, from engaging in 
     similar behavior in the future.
       (19) State.--The term ``State'' means any State of the 
     United States, the District of Columbia, the Commonwealth of 
     Puerto Rico, the Northern Mariana Islands, the Virgin 
     Islands, Guam, American Samoa, and any other territory or 
     possession of the United States or any political subdivision 
     of any of the foregoing.
       (20) Tobacco product.--The term ``tobacco product'' means--
       (A) a cigarette, as defined in section 3 of the Federal 
     Cigarette Labeling and Advertising Act (15 U.S.C. 1332);
       (B) a little cigar, as defined in section 3 of the Federal 
     Cigarette Labeling and Advertising Act (15 U.S.C. 1332);
       (C) a cigar, as defined in section 5702(a) of the Internal 
     Revenue Code of 1986;
       (D) pipe tobacco;
       (E) loose rolling tobacco and papers used to contain that 
     tobacco;
       (F) a product referred to as smokeless tobacco, as defined 
     in section 9 of the Comprehensive Smokeless Tobacco Health 
     Education Act of 1986 (15 U.S.C. 4408); and
       (G) any other form of tobacco intended for human 
     consumption.

     SEC. 102. APPLICABILITY; PREEMPTION.

       (a) Preemption.--
       (1) In general.--Except as provided in paragraph (2) and 
     title II, this title governs any product liability action 
     brought in any Federal or State court on any theory for harm 
     caused by a product.
       (2) Actions excluded.--
       (A) Actions for commercial loss.--A civil action brought 
     for commercial loss shall be governed only by applicable 
     commercial law, including applicable State law based on the 
     Uniform Commercial Code.
       (B) Actions for negligent entrustment; negligence per se 
     concerning firearms and ammunition; dram-shop.--
       (i) Negligent entrustment.--A civil action for negligent 
     entrustment shall not be subject to the provisions of this 
     title governing product liability actions, but shall be 
     subject to any applicable Federal or State law.
       (ii) Negligence per se concerning firearms and 
     ammunition.--A civil action brought under a theory of 
     negligence per se concerning the use of a firearm or 
     ammunition shall not be subject to the provisions of this 
     title governing product liability actions, but shall be 
     subject to any applicable Federal or State law.
       (iii) Dram-shop.--A civil action brought under a theory of 
     dram-shop or third-party liability arising out of the sale or 
     providing of an alcoholic product to an intoxicated person or 
     minor shall not be subject to the provisions of this title, 
     but shall be subject to any applicable Federal or State law.
       (C) Actions involving harm caused by a tobacco product.--A 
     civil action brought for harm caused by a tobacco product 
     shall not be subject to the provisions of this title 
     governing product liability actions, but shall be subject to 
     any applicable Federal or State law.
       (D) Actions involving harm caused by a breast implant.--A 
     civil action brought for harm caused by either the silicone 
     gel or the silicone envelope utilized in a breast implant 
     containing silicone gel shall not be subject to the 
     provisions of this title governing product liability actions, 
     but shall be subject to any applicable Federal or State law.
       (b) Relationship to State Law.--This title supersedes a 
     State law only to the extent that the State law applies to a 
     matter covered by this title. Any matter that is not governed 
     by this title, including any standard of liability applicable 
     to a manufacturer, shall be governed by any applicable 
     Federal or State law.
       (c) Effect on Other Law.--Nothing in this title shall be 
     construed to--
       (1) waive or affect any defense of sovereign immunity 
     asserted by any State under any law;
       (2) supersede or alter any Federal law;
       (3) waive or affect any defense of sovereign immunity 
     asserted by the United States;
       (4) affect the applicability of any provision of chapter 97 
     of title 28, United States Code;
       (5) preempt State choice-of-law rules with respect to 
     claims brought by a foreign nation or a citizen of a foreign 
     nation;
       (6) 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; or
       (7) supersede or modify any statutory or common law, 
     including any law providing for an action to abate a 
     nuisance, that authorizes a person to institute an action for 
     civil damages or civil penalties, cleanup costs, injunctions, 
     restitution, cost recovery, punitive damages, or any other 
     form of relief, for remediation of the environment (as 
     defined in section 101(8) of the Comprehensive Environmental 
     Response, Compensation, and Liability Act of 1980 (42 U.S.C. 
     9601(8)).

     SEC. 103. LIABILITY RULES APPLICABLE TO PRODUCT SELLERS, 
                   RENTERS, AND LESSORS.

       (a) General Rule.--
       (1) In general.--In any product liability action that is 
     subject to this title, a product seller other than a 
     manufacturer shall be liable to a claimant only if the 
     claimant establishes that--
       (A)(i) the product that allegedly caused the harm that is 
     the subject of the complaint was sold, rented, or leased by 
     the product seller;
       (ii) the product seller failed to exercise reasonable care 
     with respect to the product; and
       (iii) the failure to exercise reasonable care was a 
     proximate cause of the harm to the claimant;
       (B)(i) the product seller made an express warranty 
     applicable to the product that allegedly caused the harm that 
     is the subject of the complaint, independent of any express 
     warranty made by a manufacturer as to the same product;
       (ii) the product failed to conform to the warranty; and
       (iii) the failure of the product to conform to the warranty 
     caused the harm to the claimant; or
       (C)(i) the product seller engaged in intentional 
     wrongdoing, as determined under applicable State law; and
       (ii) the intentional wrongdoing caused the harm that is the 
     subject of the complaint.
       (2) Reasonable opportunity for inspection.--For purposes of 
     paragraph (1)(A)(ii), a product seller shall not be 
     considered to have failed to exercise reasonable care with 
     respect to a product based upon an alleged failure to inspect 
     the product, if--
       (A) the failure occurred because there was no reasonable 
     opportunity to inspect the product; or
       (B) the inspection, in the exercise of reasonable care, 
     would not have revealed the aspect of the product that 
     allegedly caused the claimant's harm.
       (b) Special Rule.--
       (1) In general.--A product seller shall be deemed to be 
     liable as a manufacturer of a product for harm caused by the 
     product, if--
       (A) the manufacturer is not subject to service of process 
     under the laws of any State in which the action may be 
     brought; or
       (B) the court determines that the claimant is or would be 
     unable to enforce a judgment against the manufacturer.
       (2) Statute of limitations.--For purposes of this 
     subsection only, the statute of limitations applicable to 
     claims asserting liability of a product seller as a 
     manufacturer shall be tolled from the date of the filing of a 
     complaint against the manufacturer to the date that judgment 
     is entered against the manufacturer.
       (c) Rented or Leased Products.--
       (1) Definition.--For purposes of paragraph (2), and for 
     determining the applicability of this title to any person 
     subject to that paragraph, the term ``product liability 
     action'' means a civil action brought on any theory for harm 
     caused by a product or product use.
       (2) Liability.--Notwithstanding any other provision of law, 
     any person engaged in the business of renting or leasing a 
     product (other than a person excluded from the definition of 
     product seller under section 101(17)(B)) shall be subject to 
     liability in a product liability action under subsection (a), 
     but any person engaged in the business of renting or leasing 
     a product shall not be liable to a claimant for the tortious 
     act of another solely by reason of ownership of that product.

     SEC. 104. DEFENSE BASED ON CLAIMANT'S USE OF ALCOHOL OR 
                   DRUGS.

       (a) General Rule.--In any product liability action that is 
     subject to this title, it shall be a complete defense to a 
     claim made by a claimant, if the defendant proves that the 
     claimant--
       (1) was intoxicated or was under the influence of alcohol 
     or any drug when the accident or other event which resulted 
     in that claimant's harm occurred; and
       (2) as a result of the influence of the alcohol or drug, 
     was more than 50 percent responsible for that harm.
       (b) Construction.--For purposes of subsection (a)--
       (1) the determination of whether a person was intoxicated 
     or was under the influence of alcohol or any drug shall be 
     made pursuant to applicable State law; and
       (2) the term ``drug'' means any controlled substance as 
     defined in the Controlled Substances Act (21 U.S.C. 802(6)) 
     that was not legally prescribed for use by the claimant or 
     that was taken by the claimant other than in accordance with 
     the terms of a lawfully issued prescription.

     SEC. 105. REDUCTION IN DAMAGES FOR MISUSE OR ALTERATION.

       (a) General Rule.--
       (1) In general.--In any product liability action that is 
     subject to this title, the damages for which a defendant is 
     otherwise liable under Federal or State law shall be reduced 
     by the percentage of responsibility for the claimant's harm 
     attributable to misuse or alteration of a product by any 
     person if the defendant establishes that such percentage of 
     the claimant's harm was proximately caused by a use or 
     alteration of a product--

[[Page S7601]]

       (A) in violation of, or contrary to, a defendant's express 
     warnings or instructions if the warnings or instructions are 
     adequate as determined pursuant to applicable Federal or 
     State law; or
       (B) involving a risk of harm which was known or should have 
     been known by the ordinary person who uses or consumes the 
     product with the knowledge common to the class of persons who 
     used or would be reasonably anticipated to use the product.
       (2) Use intended by a manufacturer is not misuse or 
     alteration.--For purposes of this title, a use of a product 
     that is intended by the manufacturer of the product does not 
     constitute a misuse or alteration of the product.
       (b) Workplace Injury.--Notwithstanding subsection (a), and 
     except as otherwise provided in section 112, the damages for 
     which a defendant is otherwise liable under State law shall 
     not be reduced by the percentage of responsibility for the 
     claimant's harm attributable to misuse or alteration of the 
     product by the claimant's employer who is immune from suit by 
     the claimant pursuant to the State law applicable to 
     workplace injuries.

     SEC. 106. STATUTE OF LIMITATIONS.

       (a) In General.--Except as provided in subsection (b) and 
     subject to section 107, a product liability action that is 
     subject to this title may be filed not later than 2 years 
     after the date on which the claimant discovered or, in the 
     exercise of reasonable care, should have discovered, the harm 
     that is the subject of the action and the cause of the harm.
       (b) Exceptions.--
       (1) Person with a legal disability.--A person with a legal 
     disability (as determined under applicable law) may file a 
     product liability action that is subject to this title not 
     later than 2 years after the date on which the person ceases 
     to have the legal disability.
       (2) Effect of stay or injunction.--If the commencement of a 
     civil action that is subject to this title is stayed or 
     enjoined, the running of the statute of limitations under 
     this section shall be suspended until the end of the period 
     that the stay or injunction is in effect.

     SEC. 107. STATUTE OF REPOSE FOR DURABLE GOODS USED IN A TRADE 
                   OR BUSINESS.

       (a) In General.--Except as provided in subsections (b) and 
     (c), no product liability action that is subject to this 
     title concerning a durable good alleged to have caused harm 
     (other than toxic harm) for which the claimant has received 
     or is eligible to receive workers' compensation may be filed 
     after the 18-year period beginning at the time of delivery of 
     the durable good to its first purchaser or lessee.
       (b) Extension of Statute of Repose.--Notwithstanding any 
     other provision of this section and except as provided in 
     section 106(b), a product liability action may be commenced 
     within 2 years after the date of discovery or date on which 
     discovery should have occurred, if the harm, and the cause of 
     the harm, leading to a product liability action described in 
     subsection (a) are discovered or, in the exercise of 
     reasonable care, should have been discovered, before the 
     expiration of the 18-year period under this section.
       (c) Exceptions.--
       (1) In general.--A motor vehicle, vessel, aircraft, or 
     train, that is used primarily to transport passengers for 
     hire, shall not be subject to this section.
       (2) Certain express warranties.--Subsection (a) does not 
     bar a product liability action against a defendant who made 
     an express warranty in writing as to the safety or life 
     expectancy of the specific product involved which was longer 
     than 18 years, except that such subsection shall apply at the 
     expiration of that warranty.
       (3) Aviation limitations period.--Subsection (a) does not 
     affect the limitations period established by the General 
     Aviation Revitalization Act of 1994 (49 U.S.C. 40101 note).

     SEC. 108. TRANSITIONAL PROVISION RELATING TO EXTENSION OF 
                   PERIOD FOR BRINGING CERTAIN ACTIONS.

       If any provision of section 106 or 107 shortens the period 
     during which a product liability action could be otherwise 
     brought pursuant to another provision of law, the claimant 
     may, notwithstanding sections 106 and 107, bring the product 
     liability action not later than 1 year after the date of 
     enactment of this Act.

     SEC. 109. ALTERNATIVE DISPUTE RESOLUTION PROCEDURES.

       (a) Service of Offer.--A claimant or a defendant in a 
     product liability action that is subject to this title may 
     serve upon an adverse party an offer to proceed pursuant to 
     any voluntary, nonbinding alternative dispute resolution 
     procedure established or recognized under the law of the 
     State in which the product liability action is brought or 
     under the rules of the court in which that action is 
     maintained, not later than 60 days after the later of--
       (1) service of the initial complaint; or
       (2) the expiration of the applicable period for a 
     responsive pleading.
       (b) Written Notice of Acceptance or Rejection.--
       (1) In general.--Except as provided in subsection (c), not 
     later than 20 days after the service of an offer to proceed 
     under subsection (a), an offeree shall file a written notice 
     of acceptance or rejection of the offer.
       (2) Effect of notice.--The filing of a written notice under 
     paragraph (1) shall not constitute a waiver of any objection 
     or defense in the action, including any objection on the 
     grounds of jurisdiction.
       (c) Extension.--
       (1) In general.--The court may, upon motion by an offeree 
     made before the expiration of the 20-day period specified in 
     subsection (b), extend the period for filing a written notice 
     under such subsection for a period of not more than 60 days 
     after the date of expiration of the period specified in 
     subsection (b).
       (2) Permitted discovery.--Discovery may be permitted during 
     the period described in paragraph (1).

     SEC. 110. PUNITIVE DAMAGES REFORMS.

       (a) General Rule.--
       (1) Uniform standard for award of punitive damages.--To the 
     extent punitive damages are permitted by applicable State 
     law, punitive damages may be awarded against a defendant in 
     any product liability action that is subject to this title if 
     the claimant establishes by clear and convincing evidence 
     that the harm that is the subject of the action was the 
     result of conduct carried out by the defendant with a 
     conscious, flagrant indifference to the rights or safety of 
     others.
       (2) Bifurcation at request of any party.--
       (A) In general.--At the request of any party, the trier of 
     fact in any action that is subject to this section shall 
     consider in a separate proceeding, held subsequent to the 
     determination of the amount of compensatory damages, whether 
     punitive damages are to be awarded for the harm that is the 
     subject of the action and the amount of the award.
       (B) Inadmissibility of evidence relative only to a claim of 
     punitive damages in a proceeding concerning compensatory 
     damages.--If any party requests a separate proceeding under 
     paragraph (1), in a proceeding to determine whether the 
     claimant may be awarded compensatory damages, any evidence, 
     argument, or contention that is relevant only to the claim of 
     punitive damages, as determined by applicable State law, 
     shall be inadmissible.
       (b) Special Rule for Certain Persons and Entities.--
       (1) In general.--In any action described in subsection (a) 
     against a person or entity described in paragraph (2), an 
     award of punitive damages shall not exceed the lesser of--
       (A) 2 times the amount of compensatory damages awarded; or
       (B) $250,000.
       (2) Persons and entities described.--
       (A) In general.--A person or entity described in this 
     paragraph is--
       (i) an individual whose net worth does not exceed $500,000; 
     or
       (ii) an owner of an unincorporated business, or any 
     partnership, corporation, association, unit of local 
     government, or organization that has--

       (I) annual revenues of less than or equal to $5,000,000; 
     and
       (II) fewer than 25 full-time employees.

       (B) Annual revenues and employees.--For the purpose of 
     determining the applicability of this subsection to a 
     corporation, the calculation of--
       (i) the annual revenues of that corporation shall include 
     the annual revenues of any parent corporation (or other 
     subsidiary of the parent corporation), subsidiary, branch, 
     division, department, or unit of that corporation; and
       (ii) the number of employees of that corporation shall 
     include the number of employees of any parent corporation (or 
     other subsidiary of the parent corporation), subsidiary, 
     branch, division, department, or unit of that corporation.
       (C) Reference point for determining applicability.--In 
     determining the applicability of this subsection, the 
     standards in subparagraphs (A) and (B) shall be applied as of 
     the date of commencement of any action that is subject to 
     this title. The defendant shall have the burden of proving 
     the applicability of this subsection.

     SEC. 111. LIABILITY FOR CERTAIN CLAIMS RELATING TO DEATH.

       (a) In General.--Subject to subsection (b), a defendant may 
     be liable for damages that are only punitive in nature 
     without regard to section 110 in any product liability action 
     that is subject to this title--
       (1) in which the alleged harm to the claimant is death; and
       (2) that is subject to an applicable State law that, as of 
     the date of enactment of this Act, provides, or is construed 
     to provide, for damages that are only punitive in nature.
       (b) Limitation.--Subsection (a) shall apply to an action 
     that meets the requirements of paragraphs (1) and (2) of that 
     subsection only during such period as the State law provides, 
     or is construed to provide, for damages that are only 
     punitive in nature.
       (c) Sunset.--This section shall cease to be effective on 
     September 1, 1999.

     SEC. 112. WORKERS' COMPENSATION SUBROGATION.

       (a) General Rule.--
       (1) Right of subrogation.--
       (A) In general.--An insurer shall have a right of 
     subrogation against a manufacturer or product seller to 
     recover any claimant's benefits relating to harm that is the 
     subject of a product liability action that is subject to this 
     title.
       (B) Written notification.--To assert a right of subrogation 
     under subparagraph (A), the insurer shall provide written 
     notice to the court in which the product liability action is 
     brought.

[[Page S7602]]

       (C) Insurer not required to be a party.--An insurer shall 
     not be required to be a necessary and proper party in a 
     product liability action covered under subparagraph (A).
       (2) Settlements and other legal proceedings.--
       (A) In general.--In any proceeding relating to harm or 
     settlement with the manufacturer or product seller by a 
     claimant who files a product liability action that is subject 
     to this title, an insurer may participate to assert a right 
     of subrogation for claimant's benefits with respect to any 
     payment made by the manufacturer or product seller by reason 
     of that harm, without regard to whether the payment is made--
       (i) as part of a settlement;
       (ii) in satisfaction of judgment;
       (iii) as consideration for a covenant not to sue; or
       (iv) in another manner.
       (B) Written notification.--Except as provided in 
     subparagraph (C), an employee shall not make any settlement 
     with or accept any payment from the manufacturer or product 
     seller without written notification to the insurer.
       (C) Exemption.--Subparagraph (B) shall not apply in any 
     case in which the insurer has been compensated for the full 
     amount of the claimant's benefits.
       (3) Harm resulting from action of employer.--
       (A) In general.--If, with respect to a product liability 
     action that is subject to this title, the manufacturer or 
     product seller chooses to raise to the trier of fact pursuant 
     to the provisions of this section that the harm to the 
     claimant was caused in whole or in part by the claimant's 
     employer, the issue of employer fault shall be submitted to 
     the trier of fact, but only after the manufacturer or product 
     seller has provided timely written notice to the insurer that 
     it is proceeding pursuant to the provisions of this 
     section.
       (B) Rights of insurer.--Notwithstanding any other provision 
     of law, with respect to an issue of fault submitted to a 
     trier of fact pursuant to subparagraph (A), an insurer shall, 
     in the same manner as any party in the action (even though 
     the insurer is not a named party in the action), have the 
     right to--
       (i) appear;
       (ii) be represented;
       (iii) introduce evidence;
       (iv) cross-examine adverse witnesses; and
       (v) present arguments to the trier of fact.
       (C) Reduction of damages.--If the trier of fact finds by 
     clear and convincing evidence that the fault of the employer 
     was a substantial factor in causing the harm to the claimant 
     that is the subject of the product liability action--
       (i) the court shall reduce by the amount of the claimant's 
     benefits and amounts for which payment, prior to the date of 
     final judgment in the product liability action, has not yet 
     been made for workers' compensation benefits received prior 
     to such date or is otherwise due pursuant to State workers' 
     compensation law--

       (I) the damages awarded against the manufacturer or product 
     seller; and
       (II) any corresponding insurer's subrogation lien; and

       (ii) the manufacturer or product seller shall have no 
     further right by way of contribution or otherwise against the 
     employer.
       (D) Certain rights not affected.--Notwithstanding a finding 
     by the trier of fact described in subparagraph (C), the 
     insurer shall not lose--
       (i) any right of subrogation related to any--

       (I) intentional tort committed against the claimant by a 
     coemployee; or
       (II) act committed by a coemployee outside the scope of 
     normal work practices; or

       (ii) any rights to credits against future liability 
     established pursuant to applicable State workers' 
     compensation law.
       (b) Attorney's Fees.--If, in a product liability action 
     that is subject to this section, the manufacturer or product 
     seller raises the issue of employer fault pursuant to this 
     section and the trier of fact finds that the fault of the 
     employer was not a substantial factor in causing the harm to 
     the claimant, the court shall require the manufacturer or 
     product seller to reimburse the insurer for reasonable 
     attorney's fees and court costs, as determined by the court, 
     incurred by the insurer in litigating the issue of employer 
     fault, unless the court finds that the position of the 
     manufacturer or product seller was substantially justified or 
     that special circumstances make such a reimbursement unjust.
                TITLE II--BIOMATERIALS ACCESS ASSURANCE

     SEC. 201. SHORT TITLE.

       This title may be cited as the ``Biomaterials Access 
     Assurance Act of 1998''.

     SEC. 202. FINDINGS.

       Congress find that--
       (1) each year millions of citizens of the United States 
     depend on the availability of lifesaving or life-enhancing 
     medical devices, many of which are permanently implantable 
     within the human body;
       (2) a continued supply of raw materials and component parts 
     is necessary for the invention, development, improvement, and 
     maintenance of the supply of the devices;
       (3) most of the medical devices are made with raw materials 
     and component parts that--
       (A) move in interstate commerce;
       (B) are not designed or manufactured specifically for use 
     in medical devices; and
       (C) come in contact with internal human tissue;
       (4) the raw materials and component parts also are used in 
     a variety of nonmedical products;
       (5) because small quantities of the raw materials and 
     component parts are used for medical devices, sales of raw 
     materials and component parts for medical devices constitute 
     an extremely small portion of the overall market for the raw 
     materials and component parts;
       (6) under the Federal Food, Drug, and Cosmetic Act (21 
     U.S.C. 301 et seq.), manufacturers of medical devices are 
     required to demonstrate that the medical devices are safe and 
     effective, including demonstrating that the products are 
     properly designed and have adequate warnings or instructions;
       (7) notwithstanding the fact that raw materials and 
     component parts suppliers do not design, produce, or test a 
     final medical device, the suppliers have been the subject of 
     actions alleging inadequate--
       (A) design and testing of medical devices manufactured with 
     materials or parts supplied by the suppliers; or
       (B) warnings related to the use of such medical devices;
       (8) even though suppliers of raw materials and component 
     parts have very rarely been held liable in such actions, such 
     suppliers have ceased supplying certain raw materials and 
     component parts for use in medical devices for a number of 
     reasons, including concerns about the costs of such 
     litigation;
       (9) unless alternate sources of supply can be found, the 
     unavailability of raw materials and component parts for 
     medical devices will lead to unavailability of lifesaving and 
     life-enhancing medical devices;
       (10) because other suppliers of the raw materials and 
     component parts in foreign nations are refusing to sell raw 
     materials or component parts for use in manufacturing certain 
     medical devices in the United States, the prospects for 
     development of new sources of supply for the full range of 
     threatened raw materials and component parts for medical 
     devices are remote;
       (11) it is unlikely that the small market for such raw 
     materials and component parts in the United States could 
     support the large investment needed to develop new suppliers 
     of such raw materials and component parts;
       (12) attempts to develop such new suppliers would raise the 
     cost of medical devices;
       (13) courts that have considered the duties of the 
     suppliers of the raw materials and component parts have 
     generally found that the suppliers do not have a duty--
       (A) to evaluate the safety and efficacy of the use of a raw 
     material or component part in a medical device; and
       (B) to warn consumers concerning the safety and 
     effectiveness of a medical device;
       (14) because medical devices and the raw materials and 
     component parts used in their manufacture move in interstate 
     commerce, a shortage of such raw materials and component 
     parts affects interstate commerce;
       (15) in order to safeguard the availability of a wide 
     variety of lifesaving and life-enhancing medical devices, 
     immediate action is needed--
       (A) to clarify the permissible bases of liability for 
     suppliers of raw materials and component parts for medical 
     devices; and
       (B) to provide expeditious procedures to dispose of 
     unwarranted suits against the suppliers in such manner as to 
     minimize litigation costs;
       (16) the several States and their courts are the primary 
     architects and regulators of our tort system; Congress, 
     however, must, in certain circumstances involving the 
     national interest, address tort issues, and a threatened 
     shortage of raw materials and component parts for life-saving 
     medical devices is one such circumstance; and
       (17) the protections set forth in this title are needed to 
     assure the continued supply of materials for life-saving 
     medical devices; however, negligent suppliers should not be 
     protected.

     SEC. 203. DEFINITIONS.

       As used in this title:
       (1) Biomaterials supplier.--
       (A) In general.--The term ``biomaterials supplier'' means 
     an entity that directly or indirectly supplies a component 
     part or raw material for use in the manufacture of an 
     implant.
       (B) Persons included.--Such term includes any person who--
       (i) has submitted master files to the Secretary for 
     purposes of premarket approval of a medical device; or
       (ii) licenses a biomaterials supplier to produce component 
     parts or raw materials.
       (2) Claimant.--
       (A) In general.--The term ``claimant'' means any person who 
     brings a civil action, or on whose behalf a civil action is 
     brought, arising from harm allegedly caused directly or 
     indirectly by an implant, including a person other than the 
     individual into whose body, or in contact with whose blood or 
     tissue, the implant is placed, who claims to have suffered 
     harm as a result of the implant.
       (B) Action brought on behalf of an estate.--With respect to 
     an action brought on behalf of or through the estate of an 
     individual into whose body, or in contact with whose blood or 
     tissue the implant is placed, such term includes the decedent 
     that is the subject of the action.
       (C) Action brought on behalf of a minor or incompetent.--
     With respect to an action

[[Page S7603]]

     brought on behalf of or through a minor or incompetent, such 
     term includes the parent or guardian of the minor or 
     incompetent.
       (D) Exclusions.--Such term does not include--
       (i) a provider of professional health care services, in any 
     case in which--

       (I) the sale or use of an implant is incidental to the 
     transaction; and
       (II) the essence of the transaction is the furnishing of 
     judgment, skill, or services;

       (ii) a person acting in the capacity of a manufacturer, 
     seller, or biomaterials supplier;
       (iii) a person alleging harm caused by either the silicone 
     gel or the silicone envelope utilized in a breast implant 
     containing silicone gel, except that--

       (I) neither the exclusion provided by this clause nor any 
     other provision of this title may be construed as a finding 
     that silicone gel (or any other form of silicone) may or may 
     not cause harm; and
       (II) the existence of the exclusion under this clause may 
     not--

        (aa) be disclosed to a jury in any civil action or other 
     proceeding; and
        (bb) except as necessary to establish the applicability of 
     this title, otherwise be presented in any civil action or 
     other proceeding.
       (3) Component part.--
       (A) In general.--The term ``component part'' means a 
     manufactured piece of an implant.
       (B) Certain components.--Such term includes a manufactured 
     piece of an implant that--
       (i) has significant nonimplant applications; and
       (ii) alone, has no implant value or purpose, but when 
     combined with other component parts and materials, 
     constitutes an implant.
       (4) Harm.--
       (A) In general.--The term ``harm'' means--
       (i) any injury to or damage suffered by an individual;
       (ii) any illness, disease, or death of that individual 
     resulting from that injury or damage; and
       (iii) any loss to that individual or any other individual 
     resulting from that injury or damage.
       (B) Exclusion.--The term does not include any commercial 
     loss or loss of or damage to an implant.
       (5) Implant.--The term ``implant'' means--
       (A) a medical device that is intended by the manufacturer 
     of the device--
       (i) to be placed into a surgically or naturally formed or 
     existing cavity of the body for a period of at least 30 days; 
     or
       (ii) to remain in contact with bodily fluids or internal 
     human tissue through a surgically produced opening for any 
     period of time,
       (B) suture materials used in implant procedures; and
       (C) containers and their related products to be used to 
     collect fluids or tissue from the body or to infuse or 
     otherwise introduce fluids or tissue into the body, in 
     conjunction with a medical device described in the above 
     subparagraph (A).
       (6) Manufacturer.--The term ``manufacturer'' means any 
     person who, with respect to an implant--
       (A) is engaged in the manufacture, preparation, 
     propagation, compounding, or processing (as defined in 
     section 510(a)(1)) of the Federal Food, Drug, and Cosmetic 
     Act (21 U.S.C. 360(a)(1)) of the implant; and
       (B) is required--
       (i) to register with the Secretary pursuant to section 510 
     of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 360) 
     and the regulations issued under such section; and
       (ii) to include the implant on a list of devices filed with 
     the Secretary pursuant to section 510(j) of such Act (21 
     U.S.C. 360(j)) and the regulations issued under such section.
       (7) Medical device.--The term ``medical device'' means a 
     device, as defined in section 201(h) of the Federal Food, 
     Drug, and Cosmetic Act (21 U.S.C. 321(h)) and includes any 
     device component of any combination product as that term is 
     used in section 503(g) of such Act (21 U.S.C. 353(g)).
       (8) Raw material.--The term ``raw material'' means a 
     substance or product that--
       (A) has a generic use; and
       (B) may be used in an application other than an implant.
       (9) Secretary.--The term ``Secretary'' means the Secretary 
     of Health and Human Services.
       (10) Seller.--
       (A) In general.--The term ``seller'' means a person who, in 
     the course of a business conducted for that purpose, sells, 
     distributes, leases, packages, labels, or otherwise places an 
     implant in the stream of commerce.
       (B) Exclusions.--The term does not include--
       (i) a seller or lessor of real property;
       (ii) a provider of professional services, in any case in 
     which the sale or use of an implant is incidental to the 
     transaction and the essence of the transaction is the 
     furnishing of judgment, skill, or services; or
       (iii) any person who acts in only a financial capacity with 
     respect to the sale of an implant.

     SEC. 204. GENERAL REQUIREMENTS; APPLICABILITY; PREEMPTION.

       (a) General Requirements.--
       (1) In general.--In any civil action covered by this title, 
     a biomaterials supplier may raise as a defense the exclusion 
     from liability set forth in section 205(a).
       (2) Procedures.--Notwithstanding any other provision of 
     law, the Federal or State court in which a civil action 
     covered by this title is pending shall, in connection with a 
     motion for dismissal or judgment based on a defense described 
     in paragraph (1), use the procedures set forth in section 
     206.
       (b) Applicability.--
       (1) In general.--Except as provided in paragraph (2), 
     notwithstanding any other provision of law, this title 
     applies to any civil action brought by a claimant, whether in 
     a Federal or State court, against a manufacturer, seller, or 
     biomaterials supplier, on the basis of any legal theory, for 
     harm allegedly caused by an implant.
       (2) Exclusion.--A civil action brought by a purchaser of a 
     medical device for use in providing professional services 
     against a manufacturer, seller, or biomaterials supplier for 
     loss or damage to an implant or for commercial loss to the 
     purchaser--
       (A) shall not be considered an action that is subject to 
     this title; and
       (B) shall be governed by applicable commercial or contract 
     law.
       (c) Scope of Preemption.--
       (1) In general.--This title supersedes any State law 
     regarding recovery for harm caused by an implant and any rule 
     of procedure applicable to a civil action to recover damages 
     for such harm only to the extent that this title establishes 
     a rule of law applicable to the recovery of such damages.
       (2) Applicability of other laws.--Any issue that arises 
     under this title and that is not governed by a rule of law 
     applicable to the recovery of damages described in paragraph 
     (1) shall be governed by applicable Federal or State law.
       (d) Statutory Construction.--Nothing in this title may be 
     construed--
       (1) to affect any defense available to a defendant under 
     any other provisions of Federal or State law in an action 
     alleging harm caused by an implant; or
       (2) to create a cause of action or Federal court 
     jurisdiction pursuant to sections 1331 or 1337 of title 28, 
     United States Code, that otherwise would not exist under 
     applicable Federal or State law.

     SEC. 205. LIABILITY OF BIOMATERIALS SUPPLIERS.

       (a) In General.--
       (1) Exclusion from liability.--Except as provided in 
     paragraph (2) or section 207, a biomaterials supplier shall 
     not be liable for harm to a claimant caused by an implant.
       (2) Liability.--A biomaterials supplier that--
       (A) is a manufacturer may be liable for harm to a claimant 
     described in subsection (b);
       (B) is a seller may be liable for harm to a claimant 
     described in subsection (c); and
       (C) furnishes raw materials or component parts that fail to 
     meet applicable contractual requirements or specifications 
     may be liable for harm to a claimant described in subsection 
     (d).
       (b) Liability as Manufacturer.--
       (1) In general.--A biomaterials supplier may, to the extent 
     required and permitted by any other applicable law, be liable 
     for harm to a claimant caused by an implant if the 
     biomaterials supplier is the manufacturer of the implant.
       (2) Grounds for liability.--The biomaterials supplier may 
     be considered the manufacturer of the implant that allegedly 
     caused harm to a claimant only if the biomaterials supplier--
       (A)(i) has or should have registered with the Secretary 
     pursuant to section 510 of the Federal Food, Drug, and 
     Cosmetic Act (21 U.S.C. 360) and the regulations issued under 
     such section; and
       (ii) included or should have included the implant on a list 
     of devices filed with the Secretary pursuant to section 
     510(j) of such Act (21 U.S.C. 360(j)) and the regulations 
     issued under such section;
       (B) is the subject of a declaration issued by the Secretary 
     pursuant to paragraph (3) that states that the supplier, with 
     respect to the implant that allegedly caused harm to the 
     claimant, was required to--
       (i) register with the Secretary under section 510 of such 
     Act (21 U.S.C. 360), and the regulations issued under such 
     section, but failed to do so; or
       (ii) include the implant on a list of devices filed with 
     the Secretary pursuant to section 510(j) of such Act (21 
     U.S.C. 360(j)) and the regulations issued under such section, 
     but failed to do so; or
       (C) is related by common ownership or control to a person 
     meeting all the requirements described in subparagraph (A) or 
     (B), if the court deciding a motion to dismiss in accordance 
     with section 206(c)(3)(B)(i) finds, on the basis of 
     affidavits submitted in accordance with section 206, that it 
     is necessary to impose liability on the biomaterials supplier 
     as a manufacturer because the related manufacturer meeting 
     the requirements of subparagraph (A) or (B) lacks sufficient 
     financial resources to satisfy any judgment that the court 
     feels it is likely to enter should the claimant prevail.
       (3) Administrative procedures.--
       (A) In general.--The Secretary may issue a declaration 
     described in paragraph (2)(B) on the motion of the Secretary 
     or on petition by any person, after providing--
       (i) notice to the affected persons; and
       (ii) an opportunity for an informal hearing.
       (B) Docketing and final decision.--Immediately upon receipt 
     of a petition filed pursuant to this paragraph, the Secretary 
     shall docket the petition. Not later than 120 days

[[Page S7604]]

     after the petition is filed, the Secretary shall issue a 
     final decision on the petition.
       (C) Applicability of statute of limitations.--Any 
     applicable statute of limitations shall toll during the 
     period during which a claimant has filed a petition with the 
     Secretary under this paragraph.
       (c) Liability as Seller.--A biomaterials supplier may, to 
     the extent required and permitted by any other applicable 
     law, be liable as a seller for harm to a claimant caused by 
     an implant only if--
       (1) the biomaterials supplier--
       (A) held title to the implant that allegedly caused harm to 
     the claimant as a result of purchasing the implant after--
       (i) the manufacture of the implant; and
       (ii) the entrance of the implant in the stream of commerce; 
     and
       (B) subsequently resold the implant; or
       (2) the biomaterials supplier is related by common 
     ownership or control to a person meeting all the requirements 
     described in paragraph (1), if a court deciding a motion to 
     dismiss in accordance with section 206(c)(3)(B)(ii) finds, on 
     the basis of affidavits submitted in accordance with section 
     206, that it is necessary to impose liability on the 
     biomaterials supplier as a seller because the related seller 
     meeting the requirements of paragraph (1) lacks sufficient 
     financial resources to satisfy any judgment that the court 
     feels it is likely to enter should the claimant prevail.
       (d) Liability for Violating Contractual Requirements or 
     Specifications.--A biomaterials supplier may, to the extent 
     required and permitted by any other applicable law, be liable 
     for harm to a claimant caused by an implant, if the claimant 
     in an action shows, by a preponderance of the evidence, 
     that--
       (1) the raw materials or component parts delivered by the 
     biomaterials supplier either--
       (A) did not constitute the product described in the 
     contract between the biomaterials supplier and the person who 
     contracted for delivery of the product; or
       (B) failed to meet any specifications that were--
       (i) accepted, pursuant to applicable law, by the 
     biomaterials supplier;
       (ii)(I) published by the biomaterials supplier;
       (II) provided to the manufacturer by the biomaterials 
     supplier; or
       (III) contained in a master file that was submitted by the 
     biomaterials supplier to the Secretary and that is currently 
     maintained by the biomaterials supplier for purposes of 
     premarket approval of medical devices; or
       (iii) included in the submissions for purposes of premarket 
     approval or review by the Secretary under section 510, 513, 
     515, or 520 of the Federal Food, Drug, and Cosmetic Act (21 
     U.S.C. 360, 360c, 360e, or 360j), and received clearance from 
     the Secretary if such specifications were accepted, pursuant 
     to applicable law, by the biomaterials supplier; and
       (2) such conduct was an actual and proximate cause of the 
     harm to the claimant.

     SEC. 206. PROCEDURES FOR DISMISSAL OF CIVIL ACTIONS AGAINST 
                   BIOMATERIALS SUPPLIERS.

       (a) Motion To Dismiss.--In any action that is subject to 
     this title, a biomaterials supplier who is a defendant in 
     such action may, at any time during which a motion to dismiss 
     may be filed under an applicable law, move to dismiss the 
     action against it on the grounds that--
       (1) the defendant is a biomaterials supplier; and
       (2)(A) the defendant should not, for the purposes of--
       (i) section 205(b), be considered to be a manufacturer of 
     the implant that is subject to such section; or
       (ii) section 205(c), be considered to be a seller of the 
     implant that allegedly caused harm to the claimant; or
       (B)(i) the claimant has failed to establish, pursuant to 
     section 205(d), that the supplier furnished raw materials or 
     component parts in violation of contractual requirements or 
     specifications; or
       (ii) the claimant has failed to comply with the procedural 
     requirements of subsection (b).
       (b) Manufacturer of Implant Shall Be Named a Party.--The 
     claimant shall be required to name the manufacturer of the 
     implant as a party to the action, unless--
       (1) the manufacturer is subject to service of process 
     solely in a jurisdiction in which the biomaterials supplier 
     is not domiciled or subject to a service of process; or
       (2) an action against the manufacturer is barred by 
     applicable law or rule of practice.
       (c) Proceeding on Motion To Dismiss.--The following rules 
     shall apply to any proceeding on a motion to dismiss filed 
     under this section:
       (1) Affidavits relating to listing and declarations.--
       (A) In general.--The defendant in the action may submit an 
     affidavit demonstrating that the defendant has not included 
     the implant on a list, if any, filed with the Secretary 
     pursuant to section 510(j) of the Federal Food, Drug, and 
     Cosmetic Act (21 U.S.C. 360(j)).
       (B) Response to motion to dismiss.--In response to the 
     motion to dismiss, the claimant may submit an affidavit 
     demonstrating that--
       (i) the Secretary has, with respect to the defendant and 
     the implant that allegedly caused harm to the claimant, 
     issued a declaration pursuant to section 205(b)(2)(B); or
       (ii) the defendant who filed the motion to dismiss is a 
     seller of the implant who is liable under section 205(c).
       (2) Effect of motion to dismiss on discovery.--
       (A) In general.--If a defendant files a motion to dismiss 
     under paragraph (1) or (2) of subsection (a), no discovery 
     shall be permitted in connection to the action that is the 
     subject of the motion, other than discovery necessary to 
     determine a motion to dismiss for lack of jurisdiction, 
     until such time as the court rules on the motion to 
     dismiss in accordance with the affidavits submitted by the 
     parties in accordance with this section.
       (B) Discovery.--If a defendant files a motion to dismiss 
     under subsection (a)(2)(B)(i) on the grounds that the 
     biomaterials supplier did not furnish raw materials or 
     component parts in violation of contractual requirements or 
     specifications, the court may permit discovery, as ordered by 
     the court. The discovery conducted pursuant to this 
     subparagraph shall be limited to issues that are directly 
     relevant to--
       (i) the pending motion to dismiss; or
       (ii) the jurisdiction of the court.
       (3) Affidavits relating status of defendant.--
       (A) In general.--Except as provided in clauses (i) and (ii) 
     of subparagraph (B), the court shall consider a defendant to 
     be a bio-materials supplier who is not subject to an action 
     for harm to a claimant caused by an implant, other than an 
     action relating to liability for a violation of contractual 
     requirements or specifications described in section 205(d).
       (B) Responses to motion to dismiss.--The court shall grant 
     a motion to dismiss any action that asserts liability of the 
     defendant under subsection (b) or (c) of section 205 on the 
     grounds that the defendant is not a manufacturer subject to 
     such section 205(b) or seller subject to section 205(c), 
     unless the claimant submits a valid affidavit that 
     demonstrates that--
       (i) with respect to a motion to dismiss contending the 
     defendant is not a manufacturer, the defendant meets the 
     applicable requirements for liability as a manufacturer under 
     section 205(b); or
       (ii) with respect to a motion to dismiss contending that 
     the defendant is not a seller, the defendant meets the 
     applicable requirements for liability as a seller under 
     section 205(c).
       (4) Basis of ruling on motion to dismiss.--
       (A) In general.--The court shall rule on a motion to 
     dismiss filed under subsection (a) solely on the basis of the 
     pleadings of the parties made pursuant to this section and 
     any affidavits submitted by the parties pursuant to this 
     section.
       (B) Motion for summary judgment.-- Notwithstanding any 
     other provision of law, if the court determines that the 
     pleadings and affidavits made by parties pursuant to this 
     section raise genuine issues concerning material facts with 
     respect to a motion concerning contractual requirements and 
     specifications, the court may deem the motion to dismiss to 
     be a motion for summary judgment made pursuant to subsection 
     (d).
       (d) Summary Judgment.--
       (1) In general.--
       (A) Basis for entry of judgment.--A biomaterials supplier 
     shall be entitled to entry of judgment without trial if the 
     court finds there is no genuine issue concerning any material 
     fact for each applicable element set forth in paragraphs (1) 
     and (2) of section 205(d).
       (B) Issues of material fact.--With respect to a finding 
     made under subparagraph (A), the court shall consider a 
     genuine issue of material fact to exist only if the evidence 
     submitted by claimant would be sufficient to allow a 
     reasonable jury to reach a verdict for the claimant if the 
     jury found the evidence to be credible.
       (2) Discovery made prior to a ruling on a motion for 
     summary judgment.--If, under applicable rules, the court 
     permits discovery prior to a ruling on a motion for summary 
     judgment made pursuant to this subsection, such discovery 
     shall be limited solely to establishing whether a genuine 
     issue of material fact exists as to the applicable elements 
     set forth in paragraphs (1) and (2) of section 205(d).
       (3) Discovery with respect to a biomaterials supplier.--A 
     biomaterials supplier shall be subject to discovery in 
     connection with a motion seeking dismissal or summary 
     judgment on the basis of the inapplicability of section 
     205(d) or the failure to establish the applicable elements of 
     section 205(d) solely to the extent permitted by the 
     applicable Federal or State rules for discovery against 
     nonparties.
       (e) Stay Pending Petition for Declaration.--If a claimant 
     has filed a petition for a declaration pursuant to section 
     205(b)(3)(A) with respect to a defendant, and the Secretary 
     has not issued a final decision on the petition, the court 
     shall stay all proceedings with respect to that defendant 
     until such time as the Secretary has issued a final decision 
     on the petition.
       (f) Dismissal With Prejudice.--An order granting a motion 
     to dismiss or for summary judgment pursuant to this section 
     shall be entered with prejudice, except insofar as the moving 
     defendant may be rejoined to the action as provided in 
     section 207.
       (g) Manufacturer Conduct of Litigation.--The manufacturer 
     of an implant that is the subject of an action covered under 
     this title shall be permitted to conduct litigation

[[Page S7605]]

     on any motion for summary judgment or dismissal filed by a 
     biomaterials supplier who is a defendant under this section 
     on behalf of such supplier if the manufacturer and any other 
     defendant in such action enter into a valid and applicable 
     contractual agreement under which the manufacturer agrees to 
     bear the cost of such litigation or to conduct such 
     litigation.

     SEC. 207. SUBSEQUENT IMPLEADER OF DISMISSED DEFENDANT.

       (a) Impleading of Dismissed Defendant.--A court, upon 
     motion by a manufacturer or a claimant within 90 days after 
     entry of a final judgment in an action by the claimant 
     against a manufacturer, and notwithstanding any otherwise 
     applicable statute of limitations, may implead a biomaterials 
     supplier who has been dismissed from the action pursuant to 
     this title if--
       (1) the manufacturer has made an assertion, either in a 
     motion or other pleading filed with the court or in an 
     opening or closing statement at trial, or as part of a claim 
     for contribution or indemnification, and the court makes a 
     finding based on the court's independent review of the 
     evidence contained in the record of the action, that under 
     applicable law--
       (A) the negligence or intentionally tortious conduct of the 
     dismissed supplier was an actual and proximate cause of the 
     harm to the claimant; and
       (B) the manufacturer's liability for damages should be 
     reduced in whole or in part because of such negligence or 
     intentionally tortious conduct; or
       (2) the claimant has moved to implead the supplier and the 
     court makes a finding based on the court's independent review 
     of the evidence contained in the record of the action, that 
     under applicable law--
       (A) the negligence or intentionally tortious conduct of the 
     dismissed supplier was an actual and proximate cause of the 
     harm to the claimant; and
       (B) the claimant is unlikely to be able to recover the full 
     amount of its damages from the remaining defendants.
       (b) Standard of Liability.--Notwithstanding any preliminary 
     finding under subsection (a), a biomaterials supplier who has 
     been impleaded into an action subject to this title, as 
     provided for in this section--
       (1) may, prior to entry of judgment on the claim against 
     it, supplement the record of the proceeding that was 
     developed prior to the grant of the motion for impleader 
     under subsection (a); and
       (2) may be found liable to a manufacturer or a claimant 
     only to the extent required and permitted by any applicable 
     Federal or State law other than this title in an action 
     alleging harm caused by an implant.
       (c) Discovery.--Nothing in this section shall give a 
     claimant or any other party the right to obtain discovery 
     from a biomaterials supplier defendant at any time prior to 
     grant of a motion for impleader beyond that allowed under 
     section 206.
        TITLE III--LIMITATIONS ON APPLICABILITY; EFFECTIVE DATE

     SEC. 301. FEDERAL CAUSE OF ACTION PRECLUDED.

       The district courts of the United States shall not have 
     jurisdiction pursuant to this Act based on section 1331 or 
     1337 of title 28, United States Code.

     SEC. 302. EFFECTIVE DATE.

       This Act shall apply with respect to any action commenced 
     on or after the date of enactment of this Act without regard 
     to whether the harm that is the subject of the action or the 
     conduct that caused the harm occurred before that date of 
     enactment.
                                 ______
                                 

 DEPARTMENT OF VETERANS AFFAIRS AND HOUSING AND URBAN DEVELOPMENT, AND 
             INDEPENDENT AGENCIES APPROPRIATIONS ACT, 1999

                                 ______
                                 

                      BROWNBACK AMENDMENT NO. 3065

  (Ordered to lie on the table.)
  Mr. BROWNBACK submitted an amendment intended to be proposed by him 
to the bill, S. 2168, supra; as follows:

       On page 93, between lines 18 and 19, insert the following:

     SEC. 423. USE OF STATE REVOLVING LOAN FUNDS FOR 
                   MUNICIPALITIES FOR DEVELOPMENT OF WATER 
                   SYSTEMS.

       Section 1452(a)(2) of the Safe Drinking Water Act (42 
     U.S.C. 300j-12(a)(2)) is amended in the first sentence by 
     striking ``community water systems and nonprofit noncommunity 
     water systems'' and inserting ``community water systems, 
     nonprofit noncommunity water systems, and municipalities for 
     the development of such water systems''.

                          ____________________