[Congressional Record Volume 147, Number 17 (Wednesday, February 7, 2001)]
[Senate]
[Pages S1122-S1156]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Mr. CLELAND:
  S. 269. A bill to ensure that immigrant students and their families 
receive the services the students and families need to successfully 
participate in elementary schools, secondary schools, and communities 
in the United States, and for other purposes; to the Committee on 
Health, Education, Labor, and Pensions.
  Mr. CLELAND. Mr. President, within the last decade, many States have 
experienced a wave of immigration that is rivaling the first and second 
waves of German, Irish, Polish and Scandinavian immigrants who arrived 
in the U.S. in the late 1800s and early 1900s. In fact, the Census 
Bureau is estimating that these recently arrived immigrants and 
refugees will account for 75 percent of the U.S. population growth over 
the next 50 years. These changing demographics are impacting not just 
communities accustomed to large immigrant populations like New York, 
Los Angeles and Miami, but also non-traditional immigrant communities 
like Gainesville, Georgia and Fremont County, Idaho.
  One result of our new wave of immigrants is a significant increase in 
the number of children with diverse linguistic and cultural backgrounds 
enrolling in our schools. The Waterloo, Iowa school system, for 
example, is being challenged to teach 400 Bosnian refugee children, who 
came here without knowing our language, culture or customs. Schools in 
Wausau, Wisconsin are filled with Asian children who want to achieve 
success in the United States. In Dalton, Georgia, over 51 percent of 
the student population in the public schools are Hispanic children 
eager to participate in their new schools and communities. In Turner, 
Maine, the school-aged children of hundreds of recently arrived Latino 
immigrant families are pouring into this rural town's schools.
  It is clear that U.S. schools from Florida to Washington State are 
being increasingly challenged by these changing demographics. We need 
to make sure that these children are served appropriately--and that 
their families are as well. Studies have shown that where quality 
educational programs are joined with community-based services, 
immigrants have an increased opportunity to become an integral part of 
their community and their children are better prepared to achieve 
success in school.
  The recent influx of immigrants into U.S. communities calls for 
innovative and comprehensive solutions. Today I am reintroducing the 
Immigrants to New Americans Act. This legislation would establish a 
competitive grant program within the Department of Education to assist 
schools and communities which are experiencing an influx of recently 
arrived immigrant families. Specifically, this grant program would 
provide funding to partnerships of local school districts and 
community-based organizations for the purpose of developing model 
programs with a two-fold purpose: to assist culturally and 
linguistically diverse children achieve success in America's schools 
and to provide their families with access to comprehensive community 
services, including health care, child care, job training and 
transportation.
  It does take a village to raise a child, Mr. President.
  I have seen firsthand the benefits of one community's program that 
brings together teachers, community leaders and businesses in an 
innovative partnership to aid their linguistically and culturally 
diverse population. It is the Georgia Project, and its mission is to 
assist immigrant children from Mexico achieve to higher standards in 
Dalton, Georgia's public schools.
  In recent years, the carpet and poultry industries in Dalton and 
surrounding Whitfield County experienced

[[Page S1123]]

the need for a larger workforce. The city's visionary leaders 
encouraged immigrants from Mexico to settle in their community to fill 
that need. The challenge has been in Dalton's public school system 
where Hispanic enrollment went from being just four percent ten years 
ago to over 51 percent today.
  To deal with this sizable increase, Dalton and Whitfield County 
public school administrators and business leaders formed a public-
private consortium. This consortium, known as The Georgia Project, 
initiated a teacher exchange program in 1996 with the University of 
Monterrey in Mexico. Today, twenty teachers from Mexico are helping to 
bridge the language and culture gap by serving as instructors, 
counselors and role models and providing Spanish language training to 
English-speaking students. In addition, Dalton public school teachers 
spend a month each year in Monterrey, Mexico learning firsthand the 
culture, language and customs of the Hispanic students they serve.
  There are other programs across the United States that address 
similar challenges experienced by the City of Dalton and Whitfield 
County. One such example is the Lao Family Project in St. Paul, 
Minnesota. This is a community-based refugee assistance organization 
that provides a wide range of parent-student services to Hmong and 
Vietnamese refugees in St. Paul in an effort to help parents become 
economically self-sufficient and their children succeed in school. The 
Lao Family Project's staff are bilingual/bicultural para-professionals 
who provide services that include adult English-language acquisition 
programs and preschool literacy activities for children.
  In the rural communities of Healdsburg and Windsor, California, the 
Even Start program provides a variety of instructional and support 
services to low-income, recently arrived Hispanic immigrant families 
and their preschool and elementary school children. The program focuses 
on increasing family involvement in their children's education, helping 
parents and children with their literacy skills, and offering English 
as a second language course. Many of the instructional activities for 
the parents' classes are coordinated with the classroom teachers to 
ensure consistency with what is being taught to both the parent and 
child. One focus of these classes is to communicate what the children 
are learning in their regular classes so that parents can help their 
children at home.
  The Exemplary Multicultural Practices in Rural Education Program, or 
EMPIRE, operates in the Yakima region of rural Central Washington 
State, an area with a diverse mix of ethnic groups, including 
Caucasians, Hispanics, Native Americans, African Americans, and Asian 
Americans. The program promotes positive race relations and an 
appreciation for ethnic and cultural differences. It encourages schools 
to develop learning environments where children of all backgrounds can 
be successful in school and in the community. With support from 
EMPIRE's board of advisors, each school designs and carries out its own 
projects based on local resources and needs. Schools in which EMPIRE is 
active plan a wide variety of programs and activities with emphasis on 
staff development, student awareness, parent involvement and 
improvement of curriculum and instruction.
  The Immigrants to New Americans Act is not a one-size-fits-all 
approach. It rewards model programs designed by individual communities 
to address that community's specific needs and challenges. The 
legislation is endorsed by the National Association for Bilingual 
Education, the League of United Latin American Citizens, the National 
Council of La Raza, the Hispanic Education Coalition, the India Abroad 
Center for Political Awareness, the Southeast Asia Resource Action 
Center, and the National Korean American Service and Education 
Consortium.
  Our Nation's communities are being transformed by the diverse culture 
of their citizens. Successfully addressing this change will require 
leadership, creative thinking and an eagerness to encourage and promote 
the promise that these new challenges bring. By doing so, we as a 
Nation will better serve all our children--the best guarantee we have 
of ensuring America's strength, well into the 21st Century and beyond.
  Mr. President, I ask unanimous consent that the text of the bill and 
the letters of support be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                 S. 269

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Immigrants to New Americans 
     Act''.

     SEC. 2. FINDINGS.

       Congress makes the following findings:
       (1) In 1997, there were an estimated 25,800,000 foreign-
     born individuals residing in the United States. That number 
     is the largest number of such foreign-born individuals in 
     United States history and represents a 6,000,000, or 30 
     percent, increase over the 1990 census figure of 19,800,000 
     of such foreign-born individuals. The Bureau of the Census 
     estimates that the recently arrived immigrant population 
     (including the refugee population) currently residing in the 
     Nation will account for 75 percent of the population growth 
     in the United States over the next 50 years.
       (2) For millions of immigrants settling into the Nation's 
     hamlets, towns, and cities, the dream of ``life, liberty, and 
     the pursuit of happiness'' has become a reality. The wave of 
     immigrants, of various nationalities, who have chosen the 
     United States as their home, has positively influenced the 
     Nation's image and relationship with other nations. The 
     diverse cultural heritage of the Nation's immigrants has 
     helped define the Nation's culture, customs, economy, and 
     communities. By better understanding the people who have 
     immigrated to the Nation, individuals in the United States 
     better understand what it means to be an American.
       (3) There is a critical shortage of teachers with the 
     skills needed to educate immigrant students and their 
     families in nonconcentrated, nontraditional, immigrant 
     communities as well as communities with large immigrant 
     populations. The large influx of immigrant families over the 
     last decade presents a national dilemma: The number of such 
     families with school-age children requiring assistance to 
     successfully participate in elementary schools, secondary 
     schools, and communities in the United States, is increasing 
     without a corresponding increase in the number of teachers 
     with skills to accommodate their needs.
       (4) Immigrants arriving in communities across the Nation 
     generally settle into high-poverty areas, where funding for 
     programs to provide immigrant students and their families 
     with the services the students and families need to 
     successfully participate in elementary schools, secondary 
     schools, and communities in the United States is inadequate.
       (5) The influx of immigrant families settling into many 
     United States communities is often the result of concerted 
     efforts by local employers who value immigrant labor. Those 
     employers realize that helping immigrants to become 
     productive, prosperous members of a community is beneficial 
     for the local businesses involved, the immigrants, and the 
     community. Further, local businesses benefit from the 
     presence of the immigrant families because the families 
     present businesses with a committed and effective workforce 
     and help open up new market opportunities. However, many of 
     the communities into which the immigrants have settled need 
     assistance in order to give immigrant students and their 
     families the services the students and families need to 
     successfully participate in elementary schools, secondary 
     schools, and communities in the United States.

     SEC. 3. PURPOSE.

       The purpose of this Act is to establish a grant program, 
     within the Department of Education, that provides funding to 
     partnerships of local educational agencies and community-
     based organizations for the development of model programs to 
     provide immigrant students and their families with the 
     services the students and families need to successfully 
     participate in elementary schools, secondary schools, and 
     communities in the United States.

     SEC. 4. DEFINITIONS.

       (1) Immigrant.--In this Act, the term ``immigrant'' has the 
     meaning given the term in section 101 of the Immigration and 
     Nationality Act (8 U.S.C. 1101).
       (2) Other terms.--Other terms used in this Act have the 
     meanings given the terms in section 14101 of the Elementary 
     and Secondary Education Act of 1965 (20 U.S.C. 8801).

     SEC. 5. PROGRAM AUTHORIZED.

       (a) In General.--The Secretary of Education may award not 
     more than 10 grants in a fiscal year to eligible partnerships 
     for the design and implementation of model programs to--
       (1) assist immigrant students achieve in elementary schools 
     and secondary schools in the United States by offering such 
     educational services as English as a second language classes, 
     literacy programs, programs for introduction to the education 
     system, and civics education; and
       (2) assist parents of immigrant students by offering such 
     services as parent education and literacy development 
     services and by coordinating activities with other entities 
     to

[[Page S1124]]

     provide comprehensive community social services such as 
     health care, job training, child care, and transportation 
     services.
       (b) Eligible Partnerships.--To be eligible to receive a 
     grant under this Act, a partnership--
       (1) shall include--
       (A) at least 1 local educational agency; and
       (B) at least 1 community-based organization; and
       (2) may include another entity such as--
       (A) an institution of higher education;
       (B) a local or State government agency;
       (C) a private sector entity; or
       (D) another entity with expertise in working with 
     immigrants.
       (c) Duration.--Each grant awarded under this Act shall be 
     awarded for a period of not more than 5 years. A partnership 
     may use funds made available through the grant for not more 
     than 1 year for planning and program design.

     SEC. 6. APPLICATIONS FOR GRANTS.

       (a) In General.--Each eligible partnership desiring a grant 
     under this Act shall submit an application to the Secretary 
     at such time and in such manner as the Secretary may require.
       (b) Required Documentation.--Each application submitted by 
     a partnership under this section for a proposed program shall 
     include documentation that--
       (1) the partnership has the qualified personnel required to 
     develop, administer, and implement the proposed program; and
       (2) the leadership of each participating school has been 
     involved in the development and planning of the program in 
     the school.
       (c) Other Application Contents.--Each application submitted 
     by a partnership under this section for a proposed program 
     shall include--
       (1) a list of the organizations entering into the 
     partnership;
       (2) a description of the need for the proposed program, 
     including data on the number of immigrant students, and the 
     number of such students with limited English proficiency in 
     the schools or school districts to be served through the 
     program and the characteristics of the students described in 
     this paragraph, including--
       (A) the native languages of the students to be served;
       (B) the proficiency of the students in English and the 
     students' native languages;
       (C) achievement data for the students in--
       (i) reading or language arts (in English and in the 
     students' native languages, if applicable); and
       (ii) mathematics; and
       (D) the previous schooling experiences of the students;
       (3) a description of the goals of the program;
       (4) a description of how the funds made available through 
     the grant will be used to supplement the basic services 
     provided to the immigrant students to be served;
       (5) a description of activities that will be pursued by the 
     partnership through the program, including a description of--
       (A) how parents, students, and other members of the 
     community, including members of private organizations and 
     nonprofit organizations, will be involved in the design and 
     implementation of the program;
       (B) how the activities will further the academic 
     achievement of immigrant students served through the program;
       (C) methods of teacher training and parent education that 
     will be used or developed through the program, including the 
     dissemination of information to immigrant parents, that is 
     easily understandable in the language of the parents, about 
     educational programs and the rights of the parents to 
     participate in educational decisions involving their 
     children; and
       (D) methods of coordinating comprehensive community social 
     services to assist immigrant families;
       (6) a description of how the partnership will evaluate the 
     progress of the partnership in achieving the goals of the 
     program;
       (7) a description of how the local educational agency will 
     disseminate information on model programs, materials, and 
     other information developed under this Act that the local 
     educational agency determines to be appropriate for use by 
     other local educational agencies in establishing similar 
     programs to facilitate the educational achievement of 
     immigrant students;
       (8) an assurance that the partnership will annually provide 
     to the Secretary such information as may be required to 
     determine the effectiveness of the program; and
       (9) any other information that the Secretary may require.

     SEC. 7. SELECTION OF GRANTEES.

       (a) Criteria.--The Secretary, through a peer review 
     process, shall select partnerships to receive grants under 
     this Act on the basis of the quality of the programs proposed 
     in the applications submitted under section 6, taking into 
     consideration such factors as--
       (1) the extent to which the program proposed in such an 
     application effectively addresses differences in language, 
     culture, and customs;
       (2) the quality of the activities proposed by a 
     partnership;
       (3) the extent of parental, student, and community 
     involvement;
       (4) the extent to which the partnership will ensure the 
     coordination of comprehensive community social services with 
     the program;
       (5) the quality of the plan for measuring and assessing 
     success; and
       (6) the likelihood that the goals of the program will be 
     achieved.
       (b) Geographic Distribution of Programs.--The Secretary 
     shall approve applications under this Act in a manner that 
     ensures, to the extent practicable, that programs assisted 
     under this Act serve different areas of the Nation, including 
     urban, suburban, and rural areas, with special attention to 
     areas that are experiencing an influx of immigrant groups 
     (including refugee groups), and that have limited prior 
     experience in serving the immigrant community.

     SEC. 8. EVALUATION AND PROGRAM DEVELOPMENT.

       (a) Requirement.--Each partnership receiving a grant under 
     this Act shall--
       (1) conduct a comprehensive evaluation of the program 
     assisted under this Act, including an evaluation of the 
     impact of the program on students, teachers, administrators, 
     parents, and others; and
       (2) prepare and submit to the Secretary a report containing 
     the results of the evaluation.
       (b) Evaluation Report Components.--Each evaluation report 
     submitted under this section for a program shall include--
       (1) data on the partnership's progress in achieving the 
     goals of the program;
       (2) data showing the extent to which all students served by 
     the program are meeting the State's student performance 
     standards, including--
       (A) data comparing the students served under this Act with 
     other students, with regard to grade retention and academic 
     achievement in reading and language arts, in English and in 
     the native languages of the students if the program develops 
     native language proficiency, and in mathematics; and
       (B) a description of how the activities carried out through 
     the program are coordinated and integrated with the overall 
     school program of the school in which the program described 
     in this Act is carried out, and with other Federal, State, or 
     local programs serving limited English proficient students;
       (3) data showing the extent to which families served by the 
     program have been afforded access to comprehensive community 
     social services; and
       (4) such other information as the Secretary may require.

     SEC. 9. ADMINISTRATIVE FUNDS.

       A partnership that receives a grant under this Act may use 
     not more than 5 percent of the grant funds received under 
     this Act for administrative purposes.

     SEC. 10. AUTHORIZATION OF APPROPRIATIONS.

       There are authorized to be appropriated to carry out this 
     Act $10,000,000 for fiscal year 2002 and such sums as may be 
     necessary for each of the 4 succeeding fiscal years.
                                  ____

                                          National Association for


                                          Bilingual Education,

                                 Washington, DC, January 29, 2001.
     Hon. Max Cleland,
     U.S. Senate, Senate Dirksen Building, Washington, DC.
       Dear Senator Cleland: On behalf of the National Association 
     for Bilingual Education (NABE), I want to thank you for 
     introducing legislation that will help address one of the 
     greatest challenges facing the American educational system--
     that of addressing the changing needs of emerging immigrant 
     populations.
       The dramatic demographic changes that are taking place in 
     our nation are forcing school districts and communities to 
     reevaluate their ability to integrate America's newcomers. 
     While it was once the case that immigrants settled primarily 
     in urban areas like New York City or Los Angeles, poultry 
     processing plants, meat packing firms, and other businesses 
     are attracting immigrants to states like Georgia, Iowa, 
     Arkansas, North Carolina and Idaho. Often, these communities 
     have no experience in helping immigrant children and families 
     integrate so that they too will attain the American dream and 
     help make our country stronger.
       Your bill clearly recognizes the contributions that 
     immigrants have made to the United States over its history, 
     and takes a definitive step forward in the spirit of 
     empowerment through education and community-based 
     collaboration. NABE strongly believes that given the 
     appropriate tools and support immigrant students will rise to 
     the highest of levels of achievement. Our endorsement of this 
     forward-thinking legislation is a reaffirmation of this 
     philosophy, and we hope your colleagues in Congress will 
     grant it prompt approval. Once again, I commend you on the 
     introduction of this important piece of legislation.
           Sincerely,
                                                      Delia Pompa,
     Executive Director.
                                  ____

                                                  League of United


                                      Latin American Citizens,

                                 Washington, DC, January 26, 2001.
     Hon. Max Cleland,
     U.S. Senate, Dirksen Senate Building, Washington, DC.
       Dear Senator Cleland: The League of United Latin American 
     Citizens (LULAC) wishes to thank you for your efforts at 
     facilitating and enhancing the ability of immigrant children 
     and their families to achieve success in America's schools 
     and communities. We would like to strongly support your 
     legislation, ``The Immigrants to New Americans Act.''
       We believe that this act will greatly enhance the ability 
     for schools and community-based services to develop model 
     programs aimed at helping immigrant students

[[Page S1125]]

     and their families to receive the tools that they need to be 
     successful in their new homeland.
       We find that this closely supports our mission and beliefs 
     that immigrants should be supported in any way possible. 
     LULAC is the oldest and largest Latino civil rights 
     organization in the United States. LULAC advances the 
     economic conditions, educational attainment, political 
     influence, health and civil rights of Hispanic Americans 
     through community-based programs operating at more than 700 
     LULAC Councils nationwide.
       Once again, thank you for putting forth this effort to help 
     those who need a little help getting started in this country. 
     Your legislation will help to carry the United States in a 
     positive way well into the 21st century.
           Sincerely,
                                                    Rick Dovalina,
     LULAC National President.
                                  ____



                                  National Council of La Raza,

                                 Washington, DC, January 30, 2001.
     Senator Max Cleland,
     Senate Dirksen Office Building,
     Washington, DC.
       Dear Senator Cleland: The National Council of La Raza 
     (NCLR) thanks you for your effort to facilitate and enhance 
     the participation of immigrants in American society. In 
     particular, we would like to express our support for your 
     legislation, the ``Immigrants to New Americans Act,'' which 
     would provide education, adult English as a Second Language 
     (ESL), job training, and other important services to 
     immigrants in ``emerging'' communities.
       Over the past decade, dramatic shifts have occurred in the 
     immigrant population in the United States, particularly among 
     Hispanic immigrants. Many Hispanic immigrants have settled in 
     areas where their presence had previously been virtually 
     invisible. For example, the U.S. Census Bureau determined 
     that the South (Alabama, Arkansas, Georgia, Kentucky, 
     Mississippi, North Carolina, South Carolina, and Tennessee) 
     experienced a 93% increase in its Hispanic population from 
     1990 to 1998, far outpacing growth in ``traditional'' 
     Hispanic states like California, New York, and Texas, where 
     increases hovered around 32%. While the U.S. Census Bureau 
     estimated the total Hispanic population in the South in 1998 
     to be 640,870, unofficial estimates place the Hispanic 
     population of both Georgia and North Carolina at close to 
     500,000 in each state. Midwestern states have also 
     experienced significant increases in their Hispanic 
     populations during this period, such as Iowa (74%), Minnesota 
     (61%), and Nebraska (96%). Many of these Hispanics are 
     immigrants in search of employment.
       The emergence of new immigrant populations has created a 
     significant need for educational and social services. The 
     search for employment opportunities has historically been the 
     primary impetus for the migration of immigrants. An ever-
     increasing availability of permanent employment has provided 
     the opportunity for many immigrants to settle with their 
     spouses and children, often in areas where previously there 
     had only been seasonal agricultural work available. However, 
     these opportunities have largely been in unskilled or low-
     skilled, low-paying jobs, such as the textile, poultry, and 
     construction industries in the South; meat- and vegetable-
     packing in the Midwest; and light manufacturing and service-
     sector work in major cities like New York City, Los Angeles, 
     and Houston. As these new immigrant populations form 
     permanent settlements, they often face social isolation and 
     disconnection from mainstream society.
       Emerging immigrant communities face a multitude of issues 
     in adapting to their new environment. Among the needs 
     identified in these communities are access to rigorous 
     standards-based curriculum in the public schools, effective 
     parental involvement in their children's education, adult 
     English-language acquisition programs, quality child care, 
     and employment and training. Your legislation would help 
     local communities to provide services in each of these 
     critical areas.
       NCLR believes that the ``Immigrants to New Americans Act'' 
     can have a significant, positive impact on the lives of many 
     immigrant children and families, and on the communities in 
     which they are settling. That is why we strongly support your 
     legislation and encourage the entire Congress to do the same.
           Sincerely,
                                                   Raul Yzaguirre,
     President.
                                  ____



                                 Hispanic Education Coalition,

                                                 January 29, 2001.
     Hon. Max Cleland,
     U.S. Senate, Senate Dirksen Building, Washington, DC.
       Dear Senator Cleland: On behalf of the Hispanic Education 
     Coalition (HEC)--an ad hoc coalition of national 
     organizations dedicated to improving educational 
     opportunities for over 30 million Hispanics living in the 
     United States--we are writing to commend you for introducing 
     The Immigrants to New Americans Act. We support this 
     legislation because it will help improve educational 
     opportunities for Hispanic Americans by supporting education 
     and community-based collaboration.
       Recent demographic data show that Hispanic children are the 
     fastest growing segment of the school-aged population. While 
     the majority of Hispanic children live in large urban areas 
     in states like California, Texas and Florida, more and more 
     Hispanic families are migrating to states like Arkansas, 
     Iowa, North Carolina and Georgia. Emerging immigrant 
     communities face a multitude of issues in adapting to their 
     new environment such as academic and language support and 
     effective parental involvement in their children's public 
     schools, adult English-language acquisition programs, and 
     employment and training. Communities like Rogers, Arkansas 
     are in dire need of assistance to ensure new Hispanic and 
     immigrant families are integrated in their communities and 
     schools.
       The Immigrants to Americans Act recognizes that while local 
     communities may need support, they are ultimately in the best 
     position to address the needs of the newly arrived Hispanic 
     immigrant families. We are particularly supportive of the 
     inclusion of community-based organizations as partners in 
     developing model programs that help immigrant children 
     succeed in schools and provide families with access to 
     community services.
       HEC believes that The Immigrants to New Americans Act can 
     have a significant, positive impact on the lives of many 
     immigrant children and families, their local communities and 
     our nation. That is why we strongly support your legislation 
     and encourage the entire Congress to do the same.
           Sincerely,

                                               Patricia Loera,

                                    Co-Chair, National Association
                                          For Bilingual Education.

       On behalf of: Association for the Advancement of Mexican 
     Americans (AAMA); HEP-CAMP Association; Hispanic Association 
     of Colleges and Universities (HACU); League of United Latin 
     American Citizens (LULAC); Migrant Legal Action Program; 
     National Association for Migrant Education (NAME); National 
     Association of Latino Elected and Appointed Officials 
     (NALEO); National Council of La Raza (NLCR); National Puerto 
     Rican Coalition (NPRC).
                                 ______
                                 
      By Mr. BINGAMAN (for himself, Mr. Jeffords, Mr. Levin, Mr. 
        Brownback, and Mr. Helms):
  S. 270. A bill to amend title XVIII of the Social Security Act to 
provide a transitional adjustment for certain sole community hospitals 
in order to limit any decline in payment under the prospective payment 
system for hospital outpatient department services; to the Committee on 
Finance.
  Mr. BINGAMAN. Mr. President, I rise today to introduce, along with my 
colleagues Senators Jeffords, Levin, Brownback, and Helms the ``Rural 
Hospital and Health Network Preservation Act of 2001.''
  As you are aware, rural health care providers have operating margins 
that are often much lower and more dependent upon Medicare and Medicaid 
reimbursement then suburban or urban providers. The Balanced Budget 
Refinement Act of 1999 (BBRA 99) allowed rural hospitals of less than 
100 beds to be held harmless in the conversion to the new outpatient 
Prospective Payment System by allowing them to choose to stay 
essentially under the old fee-for-service program which provided them 
with increased revenue. However, that 100-bed limit seems arbitrary and 
will actually result in many slightly larger rural hospitals, that have 
even higher per patient costs and lower per patient margins, being 
squeezed even harder under BBA 97 rules.
  With passage of the Medicare, Medicaid, and SCHIP Benefits 
Improvement and Protection Act of 2000, several additional fixes were 
put in place for rural providers. While these were steps in the right 
direction, rural hospitals with between 100 and 400 beds are still not 
being held harmless in the conversion to the new outpatient Prospective 
Payment System. This group of hospitals is still suffering under 
provisions of the BBA of 1997.
  Rural hospitals, and all hospitals for that matter, operate on very 
slim margins yet manage to bring cutting-edge medical care to the 
communities they serve. But changes in Medicare payments to hospitals 
have put many institutions in a bind.
  The bill I am introducing today will extend the BBRA of 99 hold-
harmless provisions to rural hospitals of up to 400 beds that are both 
Rural Referral Centers and Sole Community Hospitals. This will bring 
outpatient reimbursement rates for these critical health care providers 
closer in line to the actual health care costs incurred in rural 
America by these valued providers.
  Rural communities across New Mexico have felt the negative impact of 
the BBA of 97. The Carlsbad Regional Medical Center, Eastern New Mexico 
Medical Center, San Juan Regional Medical Center, and Lea Regional 
Hospital have

[[Page S1126]]

all been suffering because of the BBA of 97. They tell me that they are 
bearing substantially higher expenses per patient due to diseconomies 
of scale for the technically intensive speciality care that is required 
at these types of facilities. In addition, they face difficulties in 
recruiting qualified health professionals, as well as qualified coders 
and compliance experts that are required under the new outpatient 
Prospective Payment System given Medicare's complexity. This is not a 
New Mexico only problem. There are at least sixty-one other rural 
hospitals that fall in this same category across the United States that 
are also suffering.
  While the positive restorative effects of BBRA of 99 and the recently 
enacted ``Medicare, Medicaid, and SCHIP Benefits Improvement and 
Protection Act of 2000'' were very helpful, they are not enough to 
protect rural providers. We must prevent rural hospitals from reducing 
services or closing completely. When a rural hospital reduces services, 
or worse yet closes, local residents lose access to preventive, 
routine, and even emergency services. Doctors and other highly trained 
professionals move away. Then people must drive a hundred miles or more 
in some cases to get the care city dwellers take for granted. Local 
economies suffer when jobs are lost. Existing businesses may have to 
move, and new businesses won't locate in places where health care is 
unavailable. Hospital closure can be a death-knell for struggling 
towns. We must move forward to preserve and strengthen the ability of 
our Nation's rural hospitals and other Medicare providers to provide 
adequate health care to their patients.
  I urge my colleagues to support and pass the Rural Hospital and 
Health Network Preservation Act of 2001.
  I ask consent that the text of the bill be printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 270

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Rural Hospital and Health 
     Network Preservation Act of 2001''.

     SEC. 2. TEMPORARY TREATMENT OF CERTAIN SOLE COMMUNITY 
                   HOSPITALS TO LIMIT DECLINE IN PAYMENT UNDER THE 
                   OPD PPS.

       (a) Hold Harmless Provision.--Section 1833(t)(7)(D)(i) of 
     the Social Security Act (42 U.S.C. 1395l(t)(7)(D)(i)) is 
     amended by inserting ``(or not more than 400 beds if such 
     hospital is a sole community hospital (as defined in section 
     1886(d)(5)(D)(iii)) and is classified as a rural referral 
     center under section 1886(d)(5)(C))'' after ``100 beds''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect as if included in the amendments made by 
     section 202(a) of the Medicare, Medicaid, and SCHIP Balanced 
     Budget Refinement Act of 1999 (113 Stat. 1501A-342), as 
     enacted into law by section 1000(a)(6) of Public Law 106-113.
                                 ______
                                 
      By Mr. FEINGOLD:
  S. 272. A bill to rescind fiscal year 2001 procurement funds for the 
V-22 Osprey aircraft program other than as necessary to maintain the 
production base and to require certain reports to Congress concerning 
that program; to the Committee on Appropriations and the Committee on 
the Budget, concurrently, pursuant to the order of January 30, 1975, as 
modified by the order of April 11, 1986, with instructions that the 
Budget Committee be authorized to report its views to the 
Appropriations Committee, and that the latter alone be authorized to 
report the bill.
  Mr. FEINGOLD. Mr. President, today I am introducing the Osprey 
Safety, Performance, and Reliability Evaluation Act of 2001. This 
legislation would delay the procurement of the V-22 Osprey tilt-rotor 
aircraft for one year, and would require reports from the Secretary of 
the Navy and the Department of Defense's Inspector General regarding 
the program.
  The Osprey is an experimental tilt-rotor aircraft that takes off and 
lands like a helicopter, but flies like an airplane by tilting its 
wing-mounted rotors forward to serve as propellers. The premise for the 
aircraft is to combine the operational flexibility of a helicopter with 
the speed, range, and efficiency of a fixed-wing aircraft.
  The Marines, Air Force, and Navy all want to purchase versions of 
this aircraft. The MV-22 would be used by the Marines for missions such 
as troop and cargo transport and amphibious assault; the CV-22 would be 
used by the Air Force for special operations; and the HV-22 would be 
used by the Navy for search and rescue missions.
  I want to be very clear. This bill does not terminate the V-22 
program. It does not affect the Marine Corps' ability to continue the 
research, development, testing, and evaluation of this aircraft.
  This bill delays the start of full-rate procurement of the MV-22 
Osprey, the Marines' version of this aircraft, for one year. It also 
delays the procurement of four CV-22s, the Air Force's version of this 
aircraft, for one year.
  There are serious allegations and serious questions surrounding the 
V-22 program. Thirty Marines have died in Osprey crashes since 1991. 
Many questions regarding the validity of maintenance records and the 
safety and viability of this aircraft remain unanswered.
  We cannot, in good conscience, move forward with the full-scale 
procurement of the MV-22 until these allegations have been investigated 
fully and until these questions have been answered.
  We should not move forward with the procurement of this aircraft 
until further testing has been done to address potentially serious 
design flaws that could continue to endanger the lives of our military 
personnel.
  We owe it to our men and women in uniform to put their safety first. 
They are willing to go into harm's way while serving their country. 
That service should not include being put into harm's way by a 
potentially unsafe aircraft. We should not move forward with the 
procurement of an aircraft that crashed as recently as December. We 
should not procure this aircraft until the Department of Defense is 
absolutely certain that all major design flaws have been corrected.
  The legislation that I am introducing today will delay full-rate 
production of the MV-22 for one year. This delay is prudent given the 
ongoing controversy that has loomed over this program during the last 
weeks and months.
  I want to reiterate that this legislation does not require the 
Department of Defense to terminate the Osprey program. I appreciate the 
importance of this program to the Marine Corps. I agree that they need 
to replace the aging CH-46 Sea Knight helicopters that they currently 
have. However, I am not sure that the Osprey is the safest and most 
cost-effective alternative to the Sea Knight.
  I know that the leaders of the Marines and the Air Force have the 
greatest concern for the safety of their personnel who are and who will 
be assigned to the Osprey program. I share that concern. My bill would 
require the Marine Corps to wait one year to move to full-rate 
production of the MV-22. Because the airframes for the MV-22 and the 
CV-22 are 90 percent similar, it follows that the four CV-22s the Air 
Force plans to buy this year may be subject to many of the same design 
flaws that have been found in the MV-22. For that reason, my bill would 
also require the Air Force to wait one year to procure the four CV-22s, 
which would be used to train their pilots.
  I realize that an effort is being made to address the design flaws 
found during testing of this aircraft resulting in some changes in the 
new planes that are scheduled to go into production in fiscal year 
2001. However, I remain concerned about the many unanswered questions, 
and the potentially costly retrofits that these aircraft would require 
as more information about the safety and reliability of the Osprey 
continues to come to light. In my view, it would be more prudent and 
more cost effective to wait to move to full-rate production until these 
questions have been answered.
  For those reasons, my bill rescinds most of the fiscal year 2001 
procurement funds for the MV-22 and the CV-22, but leaves enough 
funding in place to maintain the integrity of the production line. 
These rescissions would return to the taxpayers more than $1.2 billion 
dollars. This kind of investment should not go forward until we are 
sure that the Osprey is safe.
  The bill does not affect the $148 million in research and development 
funding for this program. During the next year, vigorous research and 
testing on the problems that remain should continue once the decision 
has been made to resume test flights.

[[Page S1127]]

  This program has a troubled history. Thirty Marines have been killed 
in Osprey crashes since 1991, twenty-three of them in the past eleven 
months alone. The Osprey program has been grounded since the December 
crash that killed four Marines. Following that crash, former Secretary 
of Defense William Cohen appointed a blue ribbon panel to study the 
Osprey program. That panel's report is due to be presented to Secretary 
of Defense Rumsfeld in March or April of this year. In addition, two 
investigations on the December crash are ongoing.
  The safety of our men and women in uniform should be the top priority 
every time the Department of Defense develops and procures new 
technology, whether it be weapons, ships, or aircraft.
  During his tenure as Secretary of Defense, Vice President Cheney 
tried to cancel the V-22 program in each of his budget requests from 
fiscal year 1990 through 1993 because he believed the program was too 
costly. Congress disagreed, and the program continued to receive funds.
  When asked about the Osprey program last month, the Vice President 
said, ``Given the track record and the loss of life so far, it would 
appear to me that there are very serious questions that can and should 
be--and I hope will be--raised about the Osprey.''
  I agree with Vice President Cheney's statement, and I hope that this 
legislation will help to get answers to these serious concerns.
  One additional concern about this program is its cost. The Marines, 
the Air Force, and the Navy each want to buy a version of this 
aircraft, for a total of 458 aircraft at a cost of $38.1 billion, or 
about $83 million per Osprey. Some defense observers have argued that 
the mission of the Osprey could be performed by less costly 
helicopters.
  Another concern is the safety of the aircraft. One of the newspapers 
in my home state of Wisconsin, the Milwaukee Journal Sentinel, has 
called the Osprey a ``lemon with wings.'' Is that a fair description? 
There is reason to pause and take a good look at the program and find 
out. In addition to the four crashes that have occurred since 1991, 
there are also a number of unanswered questions regarding the design 
and performance of the aircraft.
  The MV-22 underwent operational evaluation, OPEVAL, between October 
1999 and August 2000. During OPEVAL, in June 2000, a draft DoD 
Inspector General's report cited 23 major operational effectiveness and 
suitability requirements that would not be met prior to the scheduled 
December 2000 Milestone III decision on whether to enter into full-rate 
production of the MV-22 in June 2001. The Marine Corps conceded that 
these problems exist, and said they had been aware of these 
deficiencies prior to the beginning of the OPEVAL.
  In October 2000, the Navy announced that the MV-22 had been judged 
operationally effective and suitable for land-based operations. In 
November 2000, the MV-22 was also judged operationally effective and 
suitable for sea-based operations.
  Following the completion of OPEVAL, the Department of Defense's 
Director of Operational Testing and Evaluation, Philip Coyle, released 
his report on the MV-22. This report, which was issued on November 17, 
2000, makes a number of recommendations regarding further testing that 
should be conducted on this aircraft, including testing on a number of 
requirements for the aircraft that were waived during OPEVAL.
  Particularly troubling are the MV-22's Mission Capable, MC, and Full 
Mission Capable, FMC, rates at the end of OPEVAL. These ratings 
demonstrate the availability of the aircraft--the amount of time that 
each MV-22 is able to fly versus the amount of time that each MV-22 is 
unavailable due to maintenance needs.
  The Mission Capable rating represents the percentage of time that the 
test aircraft were able to perform at least one of their assigned 
missions. The Marine Corps' objective for the MC rate is between 82 and 
87 percent. At the end of OPEVAL, the MC rate for the MV-22 was 49 
percent. That means, Mr. President, that the MV-22 test fleet was 
capable of performing at least one of its missions only 49 percent of 
the time during OPEVAL. From 1995-1999, the entire CH-46 fleet Sea 
Knight fleet, which the Osprey is supposed to replace, was rated 
Mission Capable 79 percent of the time.
  The Full Mission Capable rate, FMC, is defined as the percentage of 
time that the aircraft could perform all of its assigned missions. The 
Marine Corps' objective for FMC is 75 percent. At the end of OPEVAL, 
the MV-22 had a FMC rate of only 20 percent. From 1995-1999, the CH-46 
fleet had a FMC rate of 74 percent.
  I want to say this again--at the end of OPEVAL, the MV-22 test fleet 
was capable of performing all of its assigned missions only 20 percent 
of the time. The Coyle report says that part of this low rating can be 
attributed to problems with the blade fold wing stow, BFWS, system, and 
that measures to address this problem will be incorporated into all new 
MV-22s.

  While both the MC and the FMC both improved over the course of 
OPEVAL, both rates are still well below the Marines' own requirements. 
By delaying the full rate production of the MV-22 for one year, the 
Marines will have the opportunity to further improve these crucial 
rates, including testing the modifications to the BFWS system, and 
potentially save countless maintenance hours and costs over the life of 
this program.
  In addition to the problems outlined in the Coyle report, a General 
Accounting Office report released last month titled ``Major Management 
Challenges and Program Risks: Department of Defense'' also expresses 
concern about the Osprey program. The report states that ``the DoD . . 
. begins production on many major and nonmajor weapons without first 
ensuring that the systems will meet critical performance 
requirements.'' The report cites a number of examples, including the 
Osprey. GAO reports that ``the Navy was moving toward a full-rate 
production decision on the MV-22 Osprey aircraft without having an 
appropriate level of confidence that the program would meet design 
parameters as well as cost and schedule objectives.''
  This finding is just another of the many reasons why the full-rate 
procurement of the MV-22 and the procurement of four CV-22s should be 
delayed. I share GAO's concern about the frequency with which DoD moves 
into full-rate production of systems that may not have been adequately 
tested. This rush to production often raises safety concerns and costs 
the taxpayers large sums for costly retrofits to address problems that 
were often evident--but not fixed--before full-rate production began. 
And even if the Osprey is proven to be safe, questions still remain 
about its cost.
  I am also deeply troubled by the allegations that the Commander of 
the Marine Tilt-Rotor Training Squadron 204 may have ordered his team 
to falsify maintenance records for the MV-22. An anonymous DoD whistle 
blower released a letter and documentation, including an audio tape on 
which it is reported that the Commander is heard telling his squadron 
to ``lie'' about maintenance reports on the MV-22 until the Milestone 
III decision to move into full-rate production of the aircraft had been 
made. This decision was scheduled to be made in December 2000, but has 
been postponed indefinitely. The Commander has been relieved of his 
command pending a full investigation by the DoD Inspector General's 
office.
  There have been reports that high-ranking Marine Corps officers may 
have known about the low MC and FMC rates for the MV-22 in November 
2000, and that one of them may have released inaccurate information to 
the press regarding the Mission Capable rates of the MV-22.
  An electronic mail message from one of these officers to a superior 
officer dated November 11, 2000, states that the information regarding 
the MV-22 MC and FMC rates for November contained in the message should 
be ``close held'' and that the MC and FMC rates for Squadron 204 were 
26.7 percent and 7.9 percent, respectively. The message also said that 
the sender ``had hoped to be able to use some recent numbers next month 
when [his superior] meet[s] with Dr. Buchanan for his Milestone III/FRP 
decision in December . . . this isn't going to help.''
  Later that month, on November 30, 2000, the officer who reportedly 
sent that electronic mail message participated in a DoD press briefing 
at which

[[Page S1128]]

the Osprey was discussed in some detail. During this press briefing, 
the officer said the following regarding the Mission Capable rates of 
the MV-22s being tested by Squadron 204: ``. . . as I was walking down 
here [to the briefing], I pulled the first 13 days of November, 
mission-capable rate on those airplanes, and the average is 73.2 
percent for the first 13 days in November of those nine airplanes. So 
when we start talking about the airplane, even since OPEVAL, improving 
and getting better, the answer is it is absolutely a resounding yes.''
  This information is contrary to the electronic mail message that the 
officer in question reportedly sent to a superior officer only nine 
days before, which stated that the MC rate for the MV-22s being tested 
by Squadron 204 for November 2000 was only 26.7 percent. That is a 
difference of 46.5 percent. News reports last week said that the 
officer admitted sending the message and attributes the discrepancy in 
the MC rate figures to a new software system.
  I understand that these very serious allegations are still being 
investigated, and I agree that all of those involved deserve a fair and 
impartial investigation. We should not rush to judgement about the 
alleged conduct of any of these personnel, all of whom who have 
dedicated their lives to serving and protecting this country. However, 
we must remain cognizant of the fact that the outcome of this 
investigation could have an enormous impact on the Osprey program.
  This still unfolding situation is another reason why the full rate 
procurement of the MV-22 should be delayed. Until these disturbing 
allegations have been fully investigated to determine whether records 
were falsified in order to make the Osprey appear safe and reliable, 
the Department of Defense should not move ahead with this program.
  Because of the safety concerns outlined above, Mr. President, my bill 
requires the Secretary of the Navy to submit a report to the Congress 
on the V-22 program that includes: a description of the planned uses 
for the fiscal year 2001 research and development funding for the 
Osprey program; a description of the actions taken as a result of the 
Coyle report; and a description of the manner in which the Navy and the 
Marine Corps have responded to the allegations of the falsification of 
maintenance records at Squadron 204. The bill also requires the DoD 
Inspector General to report to the Congress on the results of its 
investigation into the alleged falsification of maintenance records at 
Squadron 204. It would require that these reports be submitted three 
months after the enactment of this legislation or on the date of the 
Milestone III decision regarding full-rate production of the MV-22 
Osprey, whichever is earlier.
  The safety of our men and women in uniform should be the principle 
that guides this important decision. We should not begin to procure the 
MV-22 in mass quantities until we know for certain that this aircraft 
is safe, that its maintenance records are accurate, and that the design 
flaws described in the Coyle report have been adequately addressed.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 272

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Osprey Safety, Performance, 
     and Reliability Evaluation Act of 2001''.

     SEC. 2. RESCISSIONS.

       (a) In General.--Of the funds made available in the 
     Department of Defense Appropriations Act, 2001 (Public Law 
     106-259), the following amounts are rescinded from the 
     following accounts:
       (1) ``Aircraft Procurement, Navy'', $856,618,000, of which 
     $776,760,000 shall be derived from ``V-22 (Medium Lift)'' and 
     $79,858,000 shall be derived from ``V-22 (Medium Lift) (AP-
     CY)''.
       (2) ``Aircraft Procurement, Air Force'', $358,440,000, of 
     which $335,766,000 shall be derived from ``V-22 Osprey'' and 
     $22,674,000 shall be derived from ``V-22 Osprey (AP-CY)''.
       (b) Limitation on Use of Remaining Funds.--Following the 
     rescission made by subsection (a)(1), the balance of the 
     funds remaining available for obligation in the account 
     involved for ``V-22 (Medium Lift)'' may be used only to carry 
     out activities necessary to maintain the production base for 
     such aircraft program.

     SEC. 3. REPORTS TO CONGRESS.

       (a) Secretary of the Navy Report.--The Secretary of the 
     Navy shall submit to Congress a report on the V-22 Osprey 
     aircraft program. The report shall include the following:
       (1) A description of the activities carried out, and 
     programmed to be carried out, using funds appropriated for 
     that program for research, development, test, and evaluation 
     for fiscal year 2001.
       (2) A description of the actions taken by the Secretary as 
     a result of the report on that program issued by the Director 
     of Operational Test and Evaluation of the Department of 
     Defense dated November 17, 2000.
       (3) A description of the manner in which the Marine Corps 
     and the Department of the Navy have responded to the reports 
     of data falsification concerning the Osprey aircraft by 
     Marine Corps personnel assigned to Marine Medium Tilt-Rotor 
     Training Squadron 204.
       (b) Inspector General Report.--The Inspector General of the 
     Department of Defense shall submit to Congress a report on 
     the results, as of the submission of the report, of the 
     investigation of the Inspector General into the V-22 Osprey 
     aircraft program.
       (c) Time for Submission of Reports.--The reports under 
     subsections (a) and (b) shall each be submitted not later 
     than the earlier of the following:
       (1) The date that is three months after the date of the 
     enactment of this Act.
       (2) The date of the Milestone III decision for the V-22 
     Osprey aircraft program approving the entry of that program 
     into full-rate production.
                                 ______
                                 
      By Mr. TORRICELLI (for himself and Mr. Corzine):
  S. 273 A bill to amend title 28, United States Code, to divide New 
Jersey into 2 judicial districts; to the Committee on the Judiciary.
  Mr. TORRICELLI. Mr. President, I rise today to introduce, on behalf 
of myself and my distinguished colleague, Senator Corzine, a bill that 
will help bring more criminals to justice and create a better federal 
judicial system in New Jersey. This legislation will divide the federal 
District of New Jersey into the Southern and Northern Districts of New 
Jersey thus enabling federal courts and federal law enforcement to 
better serve the State's approximately eight million residents.
  Currently, the District of New Jersey has 17 judges. This bill does 
not increase the number of judges, but divides them between the 
Southern and Northern Districts giving the South 7 judges and the North 
10. The bill will also result in the creation of several new federal 
positions for the Southern District including a Clerk of the Court, 
U.S. Attorney, U.S. Marshal, and a Federal Public Defender.
  The creation of two districts in New Jersey is called for by the 
additional crime-fighting resources a split will bring to the State and 
by the sheer size of the State. The current District of New Jersey is 
the third most populous federal judicial district in the nation. Of the 
25 states that have a single federal judicial district, New Jersey has 
the largest population. More than a dozen states with smaller 
populations have multiple judicial districts. In fact, with more than 2 
million residents in the southern counties, the population of the 
proposed Southern District of New Jersey would exceed that of almost 
half of the current judicial districts. The proposed Northern District 
would rank even higher.
  And while the bill would not create any new judgeships, it would mean 
that, for the first time, the judges of the Southern District would 
necessarily come from and be part of the unique community they serve. 
This can only lead to enhanced sensitivity to the community's needs.
  The bill will also take a significant step towards addressing the 
disparity in crime-fighting resources allocated to northern and 
southern New Jersey. In 1998, southern New Jersey accounted for 25 
percent of the state's urban murders, 32 percent of the state's murder 
arrests and 33 percent of the state's arrests for violent crimes. 
Despite these statistics, only 10 percent of the FBI agents, 15 percent 
of U.S. Marshals and 18 percent of DEA agents in New Jersey are 
assigned to the southern counties.
  The bill will also ensure that crime-fighting decisions are made 
locally instead of by officials who are based elsewhere in the state. 
This too would result in a government more sensitive and responsive to 
the people it serves.
  Given these facts, it is not surprising that the bill has received a 
ringing endorsement from many in New Jersey's

[[Page S1129]]

legal and law enforcement community. In the last Congress, the House 
version of this bill was cosponsored by the entire southern New Jersey 
Congressional delegation. I hope to have their support again. It is 
also supported by the New Jersey State Bar Association, all of the 
southern county bar associations, the South Jersey Police Chief's 
Association, the Chamber of Commerce of Southern New Jersey, and 
various former county prosecutors and former federal law enforcement 
officials.
  While the process of reviewing and deliberating the merits of this 
legislation will be lengthy and time consuming, this is a change that 
is long overdue. The citizens of New Jersey deserve a better federal 
judicial system and their fair share of federal crime-fighting 
resources. I look forward to working with my colleagues to secure 
passage of this legislation.
  I ask unanimous consent that a copy of the legislation be printed in 
the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 273

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

     SECTION 1. FINDINGS.

       The Congress finds the following:
       (1) In 1978, the Judicial Conference of the United States 
     established a procedure for creating new Federal judicial 
     districts, which is still in force. According to the 
     ``Proceedings of the Judicial Conference, September 21-22, 
     1978'', this procedure requires that 4 principal criteria be 
     taken into consideration in evaluating the establishment of a 
     new Federal judicial district: caseload, judicial 
     administration, geography, and community convenience.
       (2) The criterion of ``caseload'' is found to include the 
     total number of Federal court cases and the number of cases 
     per Federal judge, for both criminal and civil Federal cases.
       (3)(A) The 13 southern counties of New Jersey, consisting 
     of Atlantic, Burlington, Camden, Cape May, Cumberland, 
     Gloucester, Hunterdon, Mercer, Monmouth, Ocean, Salem, 
     Somerset, and Warren Counties, have a substantial criminal 
     caseload which requires the creation of a separate judicial 
     district.
       (B) 463 Federal criminal cases originated in the 13 
     southern New Jersey counties in fiscal year 1999 and were 
     handled principally by the 5 judges of the Camden vicinage 
     and the 3 judges of the Trenton vicinage.
       (C) In fiscal year 1999, the criminal cases originating in 
     the 13 southern New Jersey counties exceeded that of 57 of 
     the current 93 Federal judicial districts other than the 
     District of New Jersey. Only 36 of the other current Federal 
     judicial districts had more criminal cases than the southern 
     region of New Jersey.
       (D) For example, in the District of Massachusetts (19 
     judges), 434 criminal cases were filed in fiscal year 1999. 
     In the District of Connecticut (14 judges), only 250 criminal 
     cases were filed in fiscal year 1999.
       (4)(A) The substantial civil caseload concentrated in the 
     southern counties of New Jersey requires the creation of a 
     separate judicial district.
       (B) Approximately 2,983 Federal civil cases originated in 
     the 13 southern New Jersey counties in fiscal year 1999 and 
     were handled principally by the 5 judges of the Camden 
     vicinage and the 3 judges of the Trenton vicinage.
       (C) In the fiscal year 1999, the civil cases originating in 
     the 13 southern New Jersey counties exceeded that of 68 of 
     the current Federal judicial districts other than the 
     District of New Jersey. Only 25 of the other Federal judicial 
     districts had more civil cases than the southern region of 
     New Jersey.
       (D) For example, in the Southern District of West Virginia, 
     a separate judicial district with 8 judges, only 1,203 civil 
     cases were commenced in fiscal year 1999. The Western 
     District of Tennessee, with 6 judges, had only 1,512 civil 
     cases commenced in fiscal year 1999.
       (5) The criterion of ``judicial administration'' is found 
     to include the backlog of pending cases in a Federal judicial 
     district, which hinders the effective resolution of pending 
     business before the court.
       (6)(A) The size of the backlog of pending cases 
     concentrated in the 13 southern counties of New Jersey 
     requires the creation of a separate judicial district.
       (B) In fiscal year 1999, the pending criminal cases 
     attributed to the 13 southern New Jersey counties exceeded 
     that of 62 of the current 93 Federal judicial districts other 
     than the District of New Jersey. Only 31 of the other current 
     Federal judicial districts had more pending criminal cases 
     than the southern region of New Jersey.
       (C) In fiscal year 1999, the pending civil cases attributed 
     to the 13 southern New Jersey counties exceeded that of 66 of 
     the current 93 Federal judicial districts other than the 
     District of New Jersey. Only 27 of the other current Federal 
     judicial districts had more pending civil cases than the 
     southern region of New Jersey.
       (D) The number of pending cases in the Camden vicinage of 
     New Jersey exceeds the number of cases pending before entire 
     judicial districts with similar numbers of judges, clearly 
     indicating that southern New Jersey merits a separate Federal 
     judicial district. For example, as of October 1, 1999, there 
     were 1,431 civil cases pending before the Camden vicinage, 
     and only 113 of those were commenced in fiscal year 1999. The 
     Western District of Tennessee, with 6 judges, had only 1,079 
     civil cases pending in fiscal year 1999. The Western District 
     of Oklahoma had only 1,356 civil cases pending in fiscal year 
     1999 before 9 judges. Finally, there are 161 criminal cases 
     pending before the Camden vicinage, while the entire Southern 
     District of Indiana, with 7 judges, had only 117 criminal 
     cases pending in fiscal year 1999.
       (7) The criterion of ``geography'' is found to mean the 
     accessibility of the central administration of the Federal 
     judicial district to officers of the court, parties with 
     business before the court, and other citizens living within 
     the Federal judicial district.
       (8)(A) The distance between the northern and southern 
     regions of New Jersey and the density of New Jersey's 
     population create a substantial barrier to the efficient 
     administration of justice.
       (B) The distance from Newark, New Jersey to Camden, New 
     Jersey is more than 85 miles.
       (C) When a new Federal court district was created in 
     Louisiana in 1971, the distance between New Orleans and Baton 
     Rouge (nearly 80 miles) was cited as a major factor in 
     creating a new district court, as travel difficulties were 
     impeding the timely administration of justice.
       (9) The criterion of ``community convenience'' is found to 
     mean the extent to which creating a new Federal judicial 
     district will allow the court to better serve the population 
     and diverse communities of the area.
       (10)(A) New Jersey's culturally and regionally diverse 
     population of over 8,000,000 citizens, widely distributed 
     across a densely populated State, is inconvenienced by having 
     only 1 judicial district.
       (B) The District of New Jersey is the third most populous 
     Federal judicial district in the United States.
       (C) The population of the 13 southern New Jersey counties 
     exceeds the population of 67 of the current 93 Federal 
     judicial districts other than the District of New Jersey. The 
     population of the 8 northern New Jersey counties (consisting 
     of Bergen, Essex, Hudson, Middlesex, Morris, Passaic, Sussex, 
     and Union) exceeds the population of 73 of the current 93 
     Federal judicial districts other than the District of New 
     Jersey.
       (D) Of the 25 States that have only a single Federal 
     judicial district (including Puerto Rico, the United States 
     territories, and the District of Columbia), New Jersey has 
     the highest population.
       (E) More than a dozen States have smaller populations than 
     New Jersey, yet they have multiple Federal judicial 
     districts, including Washington, Oklahoma, Iowa, Georgia, 
     West Virginia, and Missouri.
       (11) In evaluating the creation of a new Southern District 
     of New Jersey, the Judicial Conference should seek the views 
     of the chief judge of the affected district, the judicial 
     council for the affected circuit court, and the affected 
     United States Attorney as representative of the views of the 
     Department of Justice, as required in the procedure 
     established by the ``Proceedings of the Judicial Conference, 
     September 21-22, 1978''.

     SEC. 2. ESTABLISHMENT OF 2 DISTRICTS IN NEW JERSEY.

       (a) Creation.--Section 110 of title 28, United States Code, 
     is amended to read as follows:

     ``Sec. 110. New Jersey

       ``New Jersey is divided into 2 judicial districts to be 
     known as the Northern and Southern Districts of New Jersey.

                          ``Northern District

       ``(a) The Northern District comprises the counties of 
     Bergen, Essex, Hudson, Middlesex, Morris, Passaic, Sussex, 
     and Union.
       ``Court for the Northern District shall be held at Newark.

                          ``Southern District

       ``(b) The Southern District comprises the counties of 
     Atlantic, Burlington, Camden, Cape May, Cumberland, 
     Gloucester, Hunterdon, Mercer, Monmouth, Ocean, Salem, 
     Somerset, and Warren.
     ``Court for the Southern District shall be held at Camden and 
     Trenton.''.
       (b) Judgeships.--The item relating to New Jersey in the 
     table set forth in section 133(a) of title 28, United States 
     Code, is amended to read as follows:

``New Jersey:
  ``Northern........................................................10 
  ``Southern.......................................................7''.

       (c) Bankruptcy Judgeships.--The item relating to New Jersey 
     in the table set forth in section 152(a)(1) of title 28, 
     United States Code, is amended to read as follows:

``New Jersey:
  ``Northern.........................................................4 
  ``Southern.......................................................4''.

     SEC. 3. DISTRICT JUDGES, BANKRUPTCY JUDGES, MAGISTRATE 
                   JUDGES, UNITED STATES ATTORNEY, UNITED STATES 
                   MARSHAL, AND FEDERAL PUBLIC DEFENDER.

       (a) Transfer of District Judges.--(1) Any district judge of 
     the District Court of New Jersey who is holding office on the 
     day before the effective date of this Act and whose official 
     duty station is in Bergen, Essex, Hudson, Middlesex, Morris, 
     Passaic, Sussex,

[[Page S1130]]

     or Union County shall, on or after such effective date, be a 
     district judge for the Northern District of New Jersey. Any 
     district judge of the District Court of New Jersey who is 
     holding office on the day before the effective date of this 
     Act and whose official duty station is in Atlantic, 
     Burlington, Camden, Cape May, Cumberland, Gloucester, 
     Hunterdon, Mercer, Monmouth, Ocean, Salem, Somerset, or 
     Warren County shall, on and after such effective date, be a 
     district judge of the Southern District of New Jersey.
       (2) Whenever a vacancy occurs in a judgeship in either 
     judicial district of New Jersey, the vacancy shall first be 
     offered to those judges appointed before the enactment of 
     this Act and in active service in the other judicial district 
     of New Jersey at the time of the vacancy, and of those judges 
     wishing to fill the vacancy, the judge most senior in service 
     shall fill that vacancy. In such a case, the President shall 
     appoint a judge to fill the vacancy resulting in the district 
     of New Jersey from which such judge left office.
       (b) Transfer of Bankruptcy and Magistrate Judges.--Any 
     bankruptcy judge or magistrate judge of the District Court of 
     New Jersey who is holding office on the day before the 
     effective date of this Act and whose official duty station is 
     in Bergen, Essex, Hudson, Middlesex, Morris, Passaic, Sussex, 
     or Union County shall, on or after such effective date, be a 
     bankruptcy judge or magistrate judge, as the case may be, for 
     the Northern District of New Jersey. Any bankruptcy judge or 
     magistrate judge of the District Court of New Jersey who is 
     holding office on the day before the effective date of this 
     Act and whose official duty station is in Atlantic, 
     Burlington, Camden, Cape May, Cumberland, Gloucester, 
     Hunterdon, Mercer, Monmouth, Ocean, Salem, Somerset, or 
     Warren County shall, on and after such effective date, be a 
     bankruptcy judge or magistrate judge, as the case may be, of 
     the Southern District of New Jersey.
       (c) United States Attorney, United States Marshal, and 
     Federal Public Defender.--
       (1) Those in office.--This Act and the amendments made by 
     this Act shall not affect the tenure of office of the United 
     States attorney, the United States marshal, and the Federal 
     Public Defender, for the District of New Jersey who are in 
     office on the effective date of this Act, except that such 
     individuals shall be the United States attorney, the United 
     States marshal, and the Federal Public Defender, 
     respectively, for the Northern District of New Jersey as of 
     such effective date.
       (2) Appointments.--The President shall appoint, by and with 
     the advice and consent of the Senate, a United States 
     attorney and a United States marshal for the Southern 
     District of New Jersey. The Court of Appeals for the Third 
     Circuit shall appoint a Federal Public Defender for the 
     Southern District of New Jersey.
       (d) Pending Cases Not Affected.--This Act and the 
     amendments made by this Act shall not affect any action 
     commenced before the effective date of this Act and pending 
     in the United States District Court for the District of New 
     Jersey on such date.
       (e) Juries Not Affected.--This Act and the amendments made 
     by this Act shall not affect the composition, or preclude the 
     service, of any grand or petit jury summoned, empaneled, or 
     actually serving in the Judicial District of New Jersey on 
     the effective date of this Act.

     SEC. 4. EFFECTIVE DATE.

       (a) In General.--This Act and the amendments made by this 
     Act shall take effect 180 days after the date of the 
     enactment of this Act.
       (b) Appointments.--Notwithstanding subsection (a), the 
     President and the Court of Appeals for the Third Circuit may 
     make the appointments under section 3(c)(2) at any time after 
     the date of the enactment of this Act.
                                 ______
                                 
      By Mr. BAUCUS:
  S. 274. A bill to establish a Congressional Trade Office; to the 
Committee on Finance.
  Mr. BAUCUS. Mr. President, I am introducing a bill today to create a 
Congressional Trade Office. It is similar to the bill I offered in the 
last session of Congress. This legislation is designed to assist the 
Congress in fulfilling our Constitutional responsibility for trade 
policy by creating an entity that can provide us with the expertise we 
need to get independent, non-partisan, and neutral analysis and 
information about trade.
  Over the past three decades, the role of trade in our economy has 
grown enormously. In 1970, trade was equal to only eleven percent of 
our Gross Domestic Product. In contrast, today exports and imports are 
equivalent to 27 percent of our economy.
  I have been in Congress for 26 years. During that time, I have 
watched a continuing transfer of authority and responsibility for trade 
policy from the Congress to the Executive Branch. The trend has been 
subtle, but it has been clear and constant. We need to reverse this 
trend.
  Article I, Section 8, of the U.S. Constitution says: ``The Congress 
shall have power . . . To regulate commerce with foreign nations.'' It 
is our responsibility to set the direction for the Executive Branch in 
its Formulation of trade policy. It is our responsibility to ensure 
that agreements with our trading partners are followed and that there 
is full compliance. It is our responsibility to provide more effective 
and active oversight of our nation's trade policy. I believe strongly 
that we must re-assert Congress' constitutionally defined 
responsibility for international commerce.
  The Congressional Trade Office I am proposing will provide the entire 
Congress, through the Senate Finance Committee and the House Ways and 
Means Committee, with the additional trade expertise that will allow us 
to meet these responsibilities.
  The trade issues that the Congress may face this session are many and 
complex: Fast track; incorporating legitimate labor and environmental 
issues into trade policy; the U.S./Jordan Free Trade Agreement; the 
U.S./Vietnam Bilateral Trade Agreement; Free Trade Area for the 
Americas; possible free trade agreements with Singapore, Chile, and 
others; Chinese accession to WTO and then compliance with its WTO 
commitments; and a new comprehensive multilateral trade round.
  Congress needs to be much better prepared to deal with these issues 
responsibly and authoritatively. That means we need access to more and 
better information, independently arrived at, from people whose 
commitment is to the Congress, and only to the Congress.
  The Congressional Trade Office would help us meet these 
responsibilities through its four core functions.
  First, it will monitor compliance with major bilateral, regional, and 
multilateral trade agreements. Congress needs the independent ability 
to look more closely at agreements with other countries. The 
Congressional Trade Office will analyze the performance under key 
agreements and evaluate success based on commercial results. It will do 
this in close consultation with the affected industries. The 
Congressional Trade Office will recommend to the Congress actions 
necessary to ensure that commitments made to the United States are 
fully implemented. It will also provide annual assessments of the 
extent to which agreements comply with labor and environmental goals.
  The General Accounting Office has reported on the deficiencies in the 
Executive Branch in following trade agreements and monitoring 
compliance. Often more energy goes into negotiating new agreements than 
into ensuring that existing agreements work. The Administration has 
increased the resources it devotes to compliance, and I supported that. 
But an independent and neutral assessment in the Congress of compliance 
is necessary. It is unrealistic to expect an agency that negotiated an 
agreement to provide a totally objective and dispassionate assessment 
of that agreement's success or failure. Human nature, and institutional 
nature, does not lead to such an outcome.
  Second, observing trade negotiations first hand is critical to the 
ability of Congress to provide meaningful oversight of trade policy. 
Congressional Trade Office staff will participate in selected 
negotiations as observers and report back to the Committees.
  Third, the Congressional Trade Office will be active in dispute 
settlement deliberations. It will evaluate each WTO decision where the 
U.S. is a participant. In the case of a U.S. loss, it will explain why 
it lost. In the case of a U.S. win, it will measure the commercial 
results from that decision. Congressional Trade Office staff should 
participate as observers on the U.S. delegation at appropriate dispute 
settlement panel meetings at the WTO.
  I don't think we even know whether the WTO dispute settlement process 
has been successful or not from the perspective of U.S. commercial 
interests. A count of wins versus losses tells us nothing. The 
Congressional Trade Office will give us the facts we need to evaluate 
this process properly.
  Fourth, the Congressional Trade Office will have an analytic 
function. For example, after the Administration delivers its annual 
National Trade Estimates report, the NTE, to Congress, it will analyze 
the major outstanding trade barriers based on the cost to the

[[Page S1131]]

U.S. economy. It will also provide an analysis of the Administration's 
Trade Policy Agenda.
  The Congressional Trade Office will analyze proposed trade 
agreements. It will examine the impact of Administration trade policy 
actions. And it will analyze the trade accounts every quarter, 
including the global current account, the global trade account, and key 
bilateral trade accounts.
  The Congressional Trade Office is designed to service the Congress. 
Its Director will report to the Senate Finance Committee and the House 
Ways and Means Committee. It will also advise other committees on both 
the impact of trade negotiations and the impact of the Administration's 
trade policy on those committees' areas of jurisdiction. Trade rules 
increasingly affect domestic regulations. Expertise on the implications 
of trade policy on domestic regulatory issues will be vitally 
necessary. The Congressional Trade Office can provide that assistance.
  The staff of the Congressional Trade Office will consist of 
professionals who have a mix of expertise in economics and trade law, 
plus in various industries and geographic regions. My expectation is 
that staff members will see this as a career position, thus, providing 
the Congress with long-term institutional memory.
  I encourage my colleagues to support this innovative proposal.
                                 ______
                                 
      By Mr. KYL (for himself, Mr. Breaux, Mr. Gramm, Mrs. Lincoln, and 
        Mr. Bayh):
  S. 275. A bill to amend the Internal Revenue Code of 1986 to repeal 
the Federal estate and gift taxes and the tax on generation-skipping 
transfers, to preserve a step up in basis of certain property acquired 
from a decedent, and for other purposes; to the Committee on Finance.
  Mr. KYL. Mr. President, today, Senators Breaux, Gramm, Lincoln, and 
Bayh and I are introducing the Estate Tax Elimination Act, a bill to 
replace the federal estate tax with a tax on capital gains earned from 
inherited assets due when those assets are sold.
  This is the approach that won the support of bipartisan majorities in 
both houses of Congress last year. Instead of levying an estate tax at 
death, Congress agreed that a tax should be imposed when income is 
actually realized from inherited property--that is, when it is sold. 
The bipartisan consensus that already exists in support of this plan 
means that Congress and President Bush--who, unlike his predecessor, 
supports repeal of the death tax--can come together and quickly dispose 
of the issue this year.
  Mr. President, the beauty of this approach is that it removes death 
as the trigger for any tax. Whether an asset is sold by the decedent 
during his or her lifetime, or by someone who later inherits the 
property, the gain is taxed the same. Death neither confers a benefit, 
nor results in a punitive, confiscatory tax. Senators on both sides of 
the aisle accepted this arrangement last year, and should support it 
again this year.
  Mr. President, we know that many Americans are troubled by the estate 
tax's complexity and high rates, and by the mere fact that it is 
triggered by a person's death rather than the realization of income. 
For a long time, I have advocated repeal, because I believe death 
should not be a taxable event.
  Others agree that the tax is problematic, but are concerned that the 
unrealized appreciation in certain assets might escape taxation forever 
if the death tax were repealed while the step-up in basis allowed by 
under current law remained in effect. That is a legitimate concern.
  We address this by recommending the elimination of both the death tax 
and the step-up in basis, and attributing a carryover basis to 
inherited property so that all gains are taxed at the time the property 
is sold and income is realized.
  The concept of a carryover basis is not new. It exists in current law 
with respect to gifts, property transferred in cases of divorce, and in 
connection with involuntary conversions of property relating to theft, 
destruction, seizure, requisition, or condemnation.
  In the latter case, when an owner receives compensation for 
involuntarily converted property, a taxable gain normally results to 
the extent that the value of the compensation exceeds the basis of the 
converted property. However, Section 1033 of the Internal Revenue Code 
allows the taxpayer to defer the recognition of the gain until the 
property is sold. The concept recommended in this amendment would treat 
the transfer of property at death--perhaps the most involuntary 
conversion of all--the same way, deferring recognition of any gain 
until the inherited property is sold.
  Small estates, which currently pay no estate tax by virtue of the 
unified credit, and no capital-gains tax by virtue of the step up, 
would be unaffected by the basis changes being proposed here. The 
estate tax would be eliminated for them, and a limited step-up in basis 
would be preserved. Each person could still step up the basis in his or 
her assets by up to $2.8 million. Beyond that, a carryover basis would 
apply.
  I want to stress to colleagues, particularly colleagues on the 
Democratic side of the aisle, that this measure would not allow 
unrealized appreciation in inherited assets--beyond the limited step-up 
amount--to go untaxed, as other death-tax repeal proposals would do. We 
are merely saying that if a tax is imposed, it should be imposed when 
income is realized.
  Mr. President, some people may ask whether the American people want 
this kind of tax relief. I will answer that question. Although most 
Americans will probably never pay a death tax, most still sense that 
there is something terribly wrong with a system that allows Washington 
to seize more than half of whatever is left after someone dies--a 
system that prevents hard-working Americans from passing the bulk of 
their nest eggs to their children or grandchildren.
  Fairness, Mr. President. That is what the effort to repeal the death 
tax is all about. A June 22-25, 2000 Gallup poll found that 60 percent 
of the people support repeal, even though about three-quarters of those 
supporters do not think they will ever have to pay a death tax 
themselves.
  A poll conducted by Zogby International on July 6, 2000, found that, 
given a choice between a candidate who believes that a large estate 
left to heirs should be taxed at a rate of 50 percent for anything over 
$2 million, and a candidate who believes that the estate tax is unfair 
to heirs and should be eliminated, 75 percent of the people prefer the 
person supporting death-tax repeal.
  Other polls similarly put support for repeal at between 70 and 80 
percent.
  Voters in two states approved referenda last November to repeal their 
state death tax: South Dakota by a vote of 79 to 21 percent, and 
Montana by a vote of 68 to 32 percent. Many other states have already 
done the same.
  Mr. President, the significant majorities in the House and Senate 
that voted for repeal last year means that we have finally found a 
formula for taxing inherited assets in a fair and commonsense way. 
Appreciated value will be taxed, but only when income is actually 
realized--that is, when the assets are sold. And then, the gains would 
be treated by the Tax Code no better, and no worse, than the gains from 
the sale of any other kind of asset.
  I invite our Senate colleagues to join in support of this bipartisan 
initiative again this year.
                                 ______
                                 
      By Mr. SHELBY (for himself, Mr. Bond, Mr. Thomas, Mr. Hagel, Mr. 
        Sessions, Mr. Helms, Mr. Inhofe, Mr. Burns, Mr. Kyl, Mr. 
        Cochran, Ms. Snowe, and Mr. Allard):
  S. 276. A bill to amend chapter 8 of title 5, United States Code, to 
provide for congressional review of any rule promulgated by the 
Internal Revenue Service that increases Federal revenue, and for other 
purposes; to the Committee on Governmental Affairs.
  Mr. SHELBY. Mr. President, I rise today with my colleague Senator 
Bond, to introduce the Stealth Tax Prevention Act. Perhaps the most 
important power given to Congress by the Constitution of the United 
States, is the responsibility of taxation. The Founding Fathers 
rationale behind bestowing this power on Congress is that as elected 
representatives, Congress remains accountable to the people when they 
levy and collect taxes. Members of Congress, unlike Federal agency 
bureaucrats, are rightly held responsible to the public for producing 
fair and prudent tax legislation.

[[Page S1132]]

  In 1996, Mr. President, Congress passed the Congressional Review Act, 
which provides that when a major agency rule takes effect, Congress has 
60 days to review it. During this time period, Congress has the option 
to pass a disapproval resolution. If no such resolution is passed, the 
rule then goes into effect.
  As you know, Mr. President, the Internal Revenue Service maintains an 
enormous amount of power over the lives and the livelihoods of the 
American taxpayers through their authority to implement and enforce the 
Tax Code. Even though Congress, and only Congress, has the authority to 
tax, the Internal Revenue Service has found a ``backdoor'' way to 
increase our federal tax burden through their interpretive authority. 
The Stealth Tax Prevention Act, that Senator Bond and I are introducing 
along with Mr. Thomas, Mr. Hagel, Mr. Kyl, Mr. Burns, Mr. Helms, Mr. 
Inhofe, Mr. Sessions, Mr. Cochran, Ms. Snowe, and Mr. Allard, will 
return the authority of taxation to the United States Congress by 
expanding the definition of a major rule to include any IRS regulation 
which increases Federal revenue.
  For example, if the Office of Management and Budget finds that the 
implementation and enforcement of a rule would result in an increase of 
Federal revenues over current practices or revenues anticipated from 
the rule on the date of the enactment of the statute, the Stealth Tax 
Prevention Act would allow Congress to review the regulations and take 
appropriate measures to avoid raising taxes on hard working Americans 
and small businesses.
  The discretionary authority of the Internal Revenue Service exposes 
small businesses, farmers, and individual taxpayers to the sometimes 
arbitrary actions of bureaucrats, creating an uncertain and, in many 
instances, a hostile environment in which to conduct day-to-day 
activities. The Stealth Tax Prevention Act will be particularly helpful 
in lowering the tax burden on small business which suffers 
disproportionately, Mr. President, from IRS regulations. This tax 
burden discourages the startup of new firms and ultimately the creation 
of new jobs in the economy, which has really made America great.
  Average American families and small businesses are saddled with the 
highest tax burden in our country's history. Americans pay federal 
income taxes, they pay state income taxes and they pay property taxes. 
On the way to work in the morning they pay a gasoline tax when they 
fill up their car and a sales tax when they buy a cup of coffee. 
Allowing federal bureaucrats to increase taxes even further at their 
own discretion through interpretation of the tax code is intolerable. 
The Stealth Tax Prevention Act will leave tax policy where it belongs--
to elected members of Congress--not an unelected and unaccountable IRS.
  Mr. BURNS. Mr. President, I rise today with my colleague from Alabama 
to introduce the Stealth Tax Prevention Act. I sponsored this bill in 
the 105th and again in the 106th Congress. I felt strongly enough about 
this bill to sponsor it again this year.
  One of the most common concerns I hear from my constituents is 
regarding the Federal Government's authority to levy and collect taxes. 
This is an important role that we in Congress do not take lightly as we 
are accountable to the voters who pay those taxes.
  Three years ago, Congress passed the Congressional Review Act, which 
provides that when a major agency rule takes effect, Congress has 60 
days to review it. During this time period, Congress has the option to 
pass a disapproval resolution. If no such resolution is passed, the 
rule then goes into effect.
  The Stealth Tax Prevention Act will expand the definition of a major 
rule to include any IRS regulation which increases taxes. It is not the 
role of the IRS to make decisions that will result in increased taxes.
  For example, if the Office of Management and Budget finds that the 
implementation and enforcement of a rule would result in an increase of 
Federal revenues over current practices or revenues anticipated from 
the rule on the date of the enactment of the statute, the Stealth Tax 
Prevention Act would allow Congress to review the regulations and take 
appropriate measures to avoid raising taxes on hard working Americans, 
in most cases, small businesses.
  Bureaucrats are not directly accountable to taxpayers--I am.
  Under the bill introduced today, an IRS implemented stealth tax could 
not go into effect for at least 60 days following its publication in 
the Federal. Register. This window would allow Congress the opportunity 
to review the rule and vote on a resolution to disapprove the tax 
increase before it is applied to a single taxpayer.
  I urge my colleagues to join us in supporting this important 
legislation to ensure that the IRS neither usurps the proper role of 
Congress--nor skirts its obligations to identify the impact of its 
proposed and final rules. When the Department of the Treasury issues a 
final IRS rule that increases taxes, Congress should have the ability 
to exercise its discretion to enact a resolution of disapproval before 
the rule is applicable to a single taxpayer.
  The Stealth Tax Prevention Act will leave tax policy where it 
belongs, to elected Members of the Congress, not unelected and 
unaccountable IRS bureaucrats.
  Thank you, Mr. President, I yield the floor.
                                 ______
                                 
      By Mr. KENNEDY (for himself, Mr. Akaka, Mr. Bingaman, Mrs. Boxer, 
        Mrs. Clinton, Mr. Corzine, Mr. Daschle, Mr. Dodd, Mr. Durbin, 
        Mr. Feingold, Mrs. Feinstein, Mr. harkin, Mr. Kerry, Ms. 
        Landrieu, Mr. Lieberman, Mr. Leahy, Mr. Levin, Ms. Mikulski, 
        Mrs. Murray, Mr. Reed, Mr. Rockefeller, Mr. Sarbanes, Mr. 
        Schumer, Mr. Wellstone, and Mr. Wyden):
  S. 277. A bill to amend the Fair Labor Standards Act of 1938 to 
provide for an increase in the Federal minimum wage; to the Committee 
on Health, Education, Labor, and Pensions.
  Mr. KENNEDY. Mr. President, this afternoon I and others will be 
introducing legislation to increase the minimum wage. We will increase 
the minimum wage by 60 cents this year, 50 cents next year, and 40 
cents the year after.
  The reason we are doing this is to recognize that over the last 8 
years, we have had the most extraordinary economic expansion, but there 
are a number of Americans, about 11 million to 13 million Americans, 
who have not benefitted from our economic expansion.
  They are the individuals who are on the lowest rung of the economic 
ladder. This is an attempt to make an adjustment in their income, and 
this increase in the minimum wage will provide an extremely modest 
increase in that income.
  This issue is a women's issue because the great majority of those who 
receive the minimum wage are women.
  This is a children's issue because the great majority of the women 
who are receiving the minimum wage have children and their lives are 
directly affected by the amount of income their mother or their parents 
make, and if they are making the minimum wage, often it is not just one 
job, but two jobs, and their lives are dramatically affected.
  It is a civil rights issue because so many of those who are earning 
the minimum wage are men and women of color.
  Most of all, it is a fairness issue. Men and women in this country 
who work 40 hours a week, 52 weeks a year should not have to live in 
poverty.
  This is about rewarding work. It is a recognition that people in our 
country who are playing by the rules attempting to provide for their 
family, if they are making a minimum wage today with a family of three, 
they are still falling $3,400 below the poverty line in the United 
States of America. This minimum wage will reduce that, but they will 
still fall within the definition of poverty.
  With this extraordinary expansion we have seen, with the 
extraordinary benefits that have gone to so many millions of Americans, 
it is time that we ought to give some attention to those who have been 
left out and left behind.
  Who are these minimum wage workers? First of all, they are men and 
women of dignity; men and women who take pride in the work they do; men 
and women who are proud to go to work and understand the value of work, 
frustrated as others might be, but nonetheless are willing to put their

[[Page S1133]]

shoulder to the wheel because they want to take care of their families 
and because they have a sense of pride.
  What do they do? By and large, minimum wage workers work in child 
care centers. They are helping to look after the children of others who 
are working hard in American industry. Many of them are assistants to 
teachers in our schools and, again, are working with children all 
across this country. Many others are working in nursing homes looking 
after those who have retired, those who need nursing home attention. 
These are men and women who are doing very important work, in many 
instances helping to make sure that the major buildings that house our 
industries and corporations are attended to during the nighttime. These 
are hard-working people, and they are people who take great pride in 
what they do, as they should.
  Let's look at what their situation has come to. This chart says: 
Working hard, but losing ground. The real value of the minimum wage. If 
we look at constant dollars, the purchasing power of the minimum wage 
was $7.66 in 1968. Over the years, we have seen how that has fallen, 
with just a few interruptions when there was an increase in the minimum 
wage in 1988 and another increase in 1994. We can see what has happened 
with the purchasing power of the minimum wage. Without an increase in 
the minimum wage, in the year 2002, it would be down to $4.75, just 
about the lowest that it has been since the mid-1960s. This is in real 
purchasing power.
  If we raise the minimum wage 60 cents, 50 cents, and 40 cents, and 
add that $1.50 on top of the $5.15 an hour now, the purchasing power 
would only be $6.14, which is identical to what it would be if we 
actually increased the minimum wage in the last 2 years by 50 cents and 
50 cents, which was our proposal. Since we lost a year, there has been 
further deterioration in the purchasing power of the minimum wage. Even 
with the step-up of 60 cents, 50 cents, and 40 cents, its purchasing 
power will still only be $6.14.
  This is an extremely modest increase. Historically, the percentage 
increase in the minimum wage we are asking for is extremely modest. 
Most other times, the percentage has been a good deal higher than it is 
in this proposal. This is a modest increase, but a very important 
increase.
  What has been happening to our minimum wage workers? This chart 
indicates what has happened to average hourly earnings from 1969 to the 
year 2000.

  You can see from the chart that the average hourly earnings have been 
constantly going up. Going back to 1969, the minimum wage was 53 
percent of average hourly earnings. In the year 2000, do you think it 
has even held at 53 percent? No. It has dropped to 37 percent of 
average hourly earnings--a dramatic reduction, even in comparison to 
what has been happening to the average American workers across the 
country. They are falling further and further behind.
  This chart is very interesting in that it shows what is happening out 
there in the workplace among those who have families with children who 
are in the bottom 40 percent of U.S. family incomes from 1979 to 1999.
  All workers are averaging 416 hours more a year. Do we understand 
that? In 1999, they are working more than 400 hours a year more than 
they were working in 1979, even when their amount of income 
proportionately was a good deal better. Now we find American workers 
are working longer and harder than any other workers in any other 
industrial country in the world. And this is true about minimum wage 
workers, who, in most instances, have not just one job but have two 
jobs.
  So for all those from whom we are going to hear in this Chamber about 
the importance of rewarding people who work, here we have some of the 
hardest workers in the world who are making pitiful little and find it 
enormously difficult to be able to provide for their families.
  Four hundred sixteen hours, what does that translate into? What it 
translates into is this: The average minimum wage worker today gets to 
spend 25 hours a week less with his or her children than they did 15 
years ago. When we are talking about family values--and we will hear a 
great deal about family values--one of the most important and basic and 
fundamental family values is having an adequate income to provide for 
one's children. The minimum wage does not provide it.
  We see from this chart that working families are increasingly living 
in poverty. The red line indicates what the poverty line represents 
here in the United States. What we have seen for many years--in the 
1960s, 1970s, right up to about 1980--is that the minimum wage was 
effectively the poverty wage. That was the bare minimum to be able to 
live with some degree of dignity in terms of providing the housing, the 
food, the shelter, the clothing, the essentials for families. What we 
have seen is this spread has been growing and increasing. Minimum wage 
workers are falling further and further behind.
  Now, this is against a very important chart here which reflects the 
changes in family incomes from 1979 to 1999. The top fifth of families' 
incomes have increased by 42 percent in the last 20 years; middle-
income families by about 11 percent over the last 20 years; the bottom 
fifth has actually declined in terms of their quality of life and in 
terms of what their income is. It shows they are going down, working 
longer, working harder, providing important kinds of services at a time 
of extraordinary economic prosperity. They are falling further and 
further and further behind. We have an opportunity to do something 
about that.
  We provided an increase in the earned-income tax credit in the recent 
times, which is helpful for those with larger families who have a 
number of children; but still, for the single mom, or the mother and 
father with a single child, the minimum wage is the way to go when you 
are talking about benefitting and increasing the income for families.
  We often hear on the Senate floor we cannot do that because if we do 
do it, we are going to have an adverse impact in terms of our 
employment situation. That is a lot of hogwash.

  Let's look at what has happened since the last time we increased the 
minimum wage. Since 1996, when we increased the minimum wage in two 
steps, we heard: We do not want to do that because it is going to have 
an adverse impact on teens. That is wrong. The unemployment rate for 
teens has actually gone down with our two-step increase in the minimum 
wage.
  For those who are lacking high school diplomas--they said: They will 
not be able to get employment at the McDonald's in order to gain work 
habits--wrong again. We found that the unemployment rate has gone down 
even for those lacking a high school diploma.
  How about, we often heard: This isn't fair to African Americans. 
Wrong again. We found out the unemployment rate has still declined. It 
is certainly more than double what it is for the national average, but 
the employment level has dropped over what it was previously. The same 
is true with regard to Hispanics. And the same is true with regard to 
women.
  So we believe this is an issue of fairness. We believe it is a matter 
of urgency. We have tried, over the period of recent years, to get this 
measure up before the Senate. We were denied that opportunity to have 
an up-or-down vote. We were told by the Republican leadership at the 
end of the last Congress: You can have this if you provide $73 billion 
in tax breaks for American companies and corporations. Effectively, 
they were saying: We are going to hold this hostage. They were going to 
hold this hostage until they got the $73 billion. They did not hold 
their own pay increase hostage. They did not hold hostage increasing 
Members' pay $3,800 a year in order to benefit businesses and 
corporations. But they are holding hostage those who are at the lowest 
level, the most vulnerable people, working hard, trying to make ends 
meet for their families. They are holding them hostage until they get 
additional tax breaks for companies and corporations at an unparalleled 
level.
  The last time we had the increase we had a modest tax break for small 
business. Small business may need help and assistance, I am for that. 
But at that time, it was $20 billion. Now that they have that up at $73 
billion, and they refuse to let us give consideration to an increase in 
the minimum wage, they are saying to all of those women, all of those 
children, all of those workers who are minimum wage workers: No,

[[Page S1134]]

you can just wait there. You can stay at $5.15 an hour. You can 
continue to work at $5.15 until we get around to developing our package 
in order for the $73 billion in tax breaks. And then at that time, when 
we are ready to get that $73 billion, the Senate of the United States 
better take all $73 billion or we are not going to increase your 
minimum wage.
  I think that is an outrageous position to take in terms of a 
contemptible attitude toward our fellow Americans.
  I want to indicate, we welcome the support we have. This issue is not 
going to go away. We are going to have to face this issue. We want to 
have a fair opportunity. It is not one of those issues that needs a 
great deal of study. All of us remember the situation where people tap 
us on the shoulder and say: Will you support H.R. 222 or S. 444? and we 
are unfamiliar with the details of a particular program. This one is 
very simple. Increase in the minimum wage: Three steps, 60, 50, 40 
cents. You don't need to have a lot of hearings.
  To reiterate, Mr. President, the minimum wage is one of the Nation's 
fundamental workplace protections. It is a bedrock right of every 
working man and woman. For over 60 years, this country has been 
committed to the principle that employees are entitled to a fair 
minimum wage that guarantees a fair day's pay for a fair day's work and 
protects the dignity of their employment.
  In recent years, the country as a whole and most Americans have 
benefitted from unprecedented prosperity--the longest period of 
economic growth in the Nation's history and the lowest unemployment 
rate in three decades. But minimum wage workers have been left out and 
left behind. A fair increase in the minimum wage is long overdue.
  The real value of the minimum wage is now nearly $3 below what it was 
in 1968. To have the purchasing power it had in that year, the minimum 
wage would have to be $8.05 an hour today, not $5.15 an hour.
  At the same time, poverty has almost doubled among full-time, year-
round workers. Since the late 1970s, it has climbed from about 1.5 
million to almost 2.5 million in 1999. An unacceptably low minimum wage 
is part of the problem. Minimum wage employees working 40 hours a week, 
52 weeks a year, earn only $10,700 a year--$3,400 below the poverty 
line for a family of three. Minimum wage workers today fail to earn 
enough to afford adequate housing in any area of this country. No one 
who works for a living should have to live in poverty.
  In too many cases, minimum wage workers are forced to work longer and 
longer hours to make ends meet, with less and less time to spend with 
their families--still without sharing fairly in the Nation's 
prosperity. In fact, the lowest paid American families worked 416 more 
hours in 1999 then they did in 1979. Since 1969, the ratio of the 
minimum wage to average hourly earnings has dropped from 53 percent to 
37 percent.
  It is shameful that Congress acted to raise its own pay by $3,800 
last year--the third pay increase in 4 years--yet we did not find time 
to provide any pay increase at all to the lowest paid workers.
  The increase in the legislation we are introducing today--the Fair 
Minimum Wage Act of 2001--will directly benefit over 11 million 
workers. It will raise the minimum wage by $1.50 in three installments: 
60 cents on the 30th day after the bill's enactment; another 50 cents 
on January 1, 2002; and 40 more cents on January 1, 2003. The bill will 
also apply the federal minimum wage to the Mariana Islands, which now 
has an unacceptably low level of $3.05 an hour.
  The $1.50 increase is necessary to make up for lost time. In real 
value, the $1.50 increase will bring the minimum wage up to the same 
level it would have been if our proposed one dollar increase had gone 
into effect last year.

  Raising the minimum wage is a labor issue, because it guarantees that 
American workers will be paid fairly for their contribution to building 
a strong Nation and a strong economy. It is a women's issue, since 60 
percent of minimum wage earners are women. It is a children's issue, 
because 33 percent of minimum wage earners are parents with children--
and 4.3 million children live in poverty, despite being in a family 
where a bread-winner works full-time, year-round. And it is a civil 
rights issue, because 16 percent of those who will benefit from a 
minimum wage increase are African Americans, and 20 percent are 
Hispanic.
  The record of past increases clearly shows that raising the minimum 
wage has not had a negative impact on jobs, employment, or inflation. 
After the last increases in the minimum wage in 1996 and 1997, the 
economy continued to grow with impressive strength. The unemployment 
rate has fallen from 5.2 percent to 4.2 percent. Twelve million new 
jobs have been created, at a pace of 230,000 per month, with more than 
6 million new service industry jobs, including one and a half million 
new retail jobs, and over a half a million new restaurant jobs. 
Similarly, the minimum wage increase during the recession in 1991 
provided needed support for low-income workers and caused no loss of 
jobs.
  President Bush supports raising the minimum wage, but suggests that 
states should be able to opt out of the increase. But allowing states 
to opt out of the minimum wage would violate the basic principle, which 
we have stood by for over 60 years, that working men and women are 
entitled to a fair minimum wage. Millions of workers across the country 
deserve a pay raise, and they deserve it now.
  The Federal minimum wage guarantees a floor, but it also allows 
States to set wage rates higher than the Federal minimum. Massachusetts 
recently raised its minimum wage to $6.75 an hour, one of the highest 
levels in the country. Other states, such as California, Connecticut, 
Vermont and Rhode Island, have also set their State rates higher than 
the Federal minimum.
  In other States, however, the State minimum wage is far below the 
Federal level. In these States, the Federal level applies to the vast 
majority of workers. But for those not covered by the Federal law, the 
State level is often extremely low. It is $1.60 in Wyoming, $2.65 in 
Kansas, and $3.35 in Texas. Clearly, Congress should not leave the 
minimum wage to the tender mercy of the States.
  A fair increase in the federal minimum wage is long overdue. I urge 
Congress to act as quickly as possible to pass this long overdue 
increase.
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 277

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Fair Minimum Wage Act of 
     2001''.

     SEC. 2. MINIMUM WAGE.

       (a) In General.--Section 6(a)(1) of the Fair Labor 
     Standards Act of 1938 (29 U.S.C. 206(a)(1)) is amended to 
     read as follows:
       ``(1) except as otherwise provided in this section, not 
     less than--
       ``(A) $5.75 an hour beginning 30 days after the date of 
     enactment of the Fair Minimum Wage Act of 2001;
       ``(B) $6.25 an hour during the year beginning January 1, 
     2002; and
       ``(C) $6.65 an hour beginning January 1, 2003;''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect 30 days after the date of enactment of this 
     Act.

     SEC. 3. APPLICABILITY OF MINIMUM WAGE TO THE COMMONWEALTH OF 
                   THE NORTHERN MARIANA ISLANDS.

       (a) In General.--Section 6 of the Fair Labor Standards Act 
     of 1938 (29 U.S.C. 206) shall apply to the Commonwealth of 
     the Northern Mariana Islands.
       (b) Transition.--Notwithstanding subsection (a), the 
     minimum wage applicable to the Commonwealth of the Northern 
     Mariana Islands under section 6(a)(1) of the Fair Labor 
     Standards Act of 1938 (29 U.S.C. 206(a)(1)) shall be--
       (1) $3.55 an hour beginning 30 days after the date of 
     enactment of this Act; and
       (2) increased by $0.50 an hour (or such lesser amount as 
     may be necessary to equal the minimum wage under section 
     6(a)(1) of such Act), beginning 6 months after the date of 
     enactment of this Act and every 6 months thereafter until the 
     minimum wage applicable to the Commonwealth of the Northern 
     Mariana Islands under this subsection is equal to the minimum 
     wage set forth in such section.
                                 ______
                                 
      By Mr. JOHNSON (for himself, Mr. Bingaman, and Ms. Snowe):
  S. 278. A bill to restore health care coverage to retired members of 
the uniformed services; to the Committee on Armed Services.

[[Page S1135]]

  Mr. JOHNSON. Mr. President, our country must honor its commitments to 
military retirees and veterans, not only because it's the right thing 
to do, but also because it's the smart thing to do. We all know the 
history: for decades, men and women who joined the military were 
promised lifetime health care coverage for themselves and their 
families. They were told, in effect, if you disrupt your family, if you 
work for low pay, if you endanger your life and limb, we will in turn 
guarantee lifetime health benefits.
  In my own family, my oldest son is in the Army and has served tours 
of duty in Bosnia and Kosovo. I fully appreciate what inadequate health 
care and broken promises can do to the morale of military families.
  Military retirees and veterans are our nation's most effective 
recruiters. Unfortunately, poor health care options make it difficult 
for these men and women to encourage the younger generation to make a 
career of the military. In fact, in South Dakota, I was talking to 
military personnel and talking to retirees who are loyal and patriotic, 
who have paid a price second to none for our nation's liberty, and they 
told me: ``Tim, I can't in good faith tell my nephews, my children, 
young people whom I encounter, that they ought to serve in the U.S. 
military, that they ought to make a career of that service because I 
see what the Congress has done to its commitment to me, to my family, 
to my neighbors.''
  I am pleased that last year we made historic improvements in health 
care coverage for the approximately 12,600 military retirees living in 
South Dakota. In the 106th Congress, I introduced the Keep Our Promise 
to America's Military Retirees Act to restore the broken promise of 
lifetime health care for military retirees and dependents. My 
bipartisan legislation received the endorsement from most military 
retiree and veterans organizations and called for military retirees to 
have the option of staying in their TRICARE military health care 
program or electing to participate in the Federal Employees Health 
Benefit Program, FEHBP.
  I offered my legislation as an amendment to last year's defense bill 
and received 52 votes. Although the amendment failed on a procedural 
motion, I was able to convince my colleagues to include one part of my 
bill--the expansion of TRICARE to Medicare-eligible military retirees--
in both the Senate defense bill and the final version signed into law.
  While I am pleased that last year's defense bill begins to address 
problems with military retiree health care, there is more work that 
needs to be done. That is why I am once again working with fellow 
Democrats and Republicans in the Senate to continue the progress we've 
made at living up to our country's commitment to those who serve in the 
military.
  Today, I am reintroducing the Keep Our Promise to America's Military 
Retirees Act to finish the job we started last year. I am pleased to be 
joined by Senator Jeff Bingaman and Senator Olympia Snowe. Similar 
legislation introduced in the House of Representatives by 
Representative Ronnie Shows and Representative Charlie Norwood already 
has overwhelming bipartisan support, and I expect a number of Democrats 
and Republicans here in the Senate to once again support my bill.
  My legislation addresses the pressing health care needs of military 
retirees under age 65. Thanks to our efforts last year, retirees over 
65 soon will be able to choose their own doctor and be covered by 
Medicare and TRICARE as a secondary payer. However, retirees under age 
65 must continue coverage under a TRICARE program that offers care at 
military treatment facilities on a space available basis. Nationwide, 
base closures and downsizing have made access to these military bases 
difficult. For many military retirees in South Dakota and other rural 
states, it is next to impossible to find a doctor participating in 
TRICARE, and these men and women are forced to drive hundreds of miles 
just for basic health care.
  In addition, retirees who entered the service prior to June 7, 1956, 
when space-available care for military retirees was enacted, actually 
have seen much of their promised benefits taken away. Under the Keep 
Our Promise to America's Military Retirees Act, the United States 
government would pay the full cost of FEHBP enrollment to this most 
elderly group of retirees.
  Congress has the unique opportunity to use a portion of the budget 
surplus to improve the quality of life for our military retirees, 
veterans, and active duty personnel. I have always believed that our 
nation's defense is only as good as the men and women who serve in our 
armed forces. Broken promises of health care, retirement benefits, 
education incentives, and pay have eroded the morale of the most 
valuable assets to our national security. I am hopeful that members of 
both parties will join me once again making these issues a priority--
instead of an afterthought--during this session of Congress.
                                 ______
                                 
      By Mr. JOHNSON (for himself, Mr. Graham, Mr. Campbell, Mr. enzi, 
        Mr. Baucus, Mr. Cleland, Mr. Daschle, and Mr. Hollings):
  S. 280. A bill to amend the Agriculture Marketing Act of 1946 to 
require retailers of beef, lamb, pork, and perishable agricultural 
commodities to inform consumers, at the final point of sale to 
consumers, of the country of origin of the commodities; to the 
Committee on Agriculture, Nutrition, and Forestry.
  Mr. GRAHAM. Mr. President, I rise today with my colleagues Senator 
Johnson, Senator Campbell, Senator Craig, and Senator Cleland to 
introduce the Consumer Right to Know Act of 2001.
  This bill would require country of origin labeling of perishable 
agricultural commodities and meat products sold in retail 
establishments. I offer this legislation to ensure that Americans know 
the origin of every orange, banana, tomato, cucumber, and green pepper 
on display in the grocery store.
  For two decades, Floridians shopping at their local grocery stores 
have been able to make educated choices about the food products they 
purchase for their families. In 1979, during my first year as governor, 
I proudly signed legislation to make country-of-origin labels mandatory 
for produce sold in Florida. This labeling requirement has proven to be 
neither complicated nor burdensome for Florida's farmers or retailers.
  Country of origin labeling is not new to the American marketplace. 
For decades, ``Made In'' labels have been as visible as price tags on 
clothes, toys, television sets, watches, and many other products. It 
makes little sense that such labels are nowhere to be found in the 
produce or meat sections of grocery stores in the vast majority of 
states. The current lack of identifying information on produce means 
that Americans who wish to heed government health warnings about 
foreign products don't have the information they need to protect 
themselves. Nor can Americans show justifiable concerns about other 
nations' labor, environmental, and agricultural standards by choosing 
other perishables.
  According to nationwide surveys, between 74 and 83 percent of 
consumers favor mandatory country of origin labeling for fresh produce. 
This is a low-cost, common sense method of informing consumers, as 
retailers will simply be asked to provide this information by means of 
a label, stamp, or placard. It is estimated that implementing produce 
labeling would take about two hours per grocery store per week. At the 
current minimum wage, this equates to about $10.30 per store per week. 
This is a remarkable small price to pay to provide American consumers 
with the information they need to make informed produce purchases.
  In addition, a study by the General Accounting Office found that all 
of the 28 countries that account for must of the U.S. produce imports 
and exports have requirements for fruit and vegetable labeling. By 
adopting this legislation, our law will become more consistent with the 
laws of our trading partners.
  Consumers have the right to know basic information about the fruits 
and vegetables that they bring home to their families. Congress can 
take a major step toward achieving this simple goal by adopting this 
amendment, thereby restoring American shoppers' ability to make an 
informed decision.
  Both Senator Johnson and I have worked on this legislation for 
several Congresses. I am very pleased to be introducing one legislative 
package this year which contains both fruit and vegetable and meat 
labeling requirements.

[[Page S1136]]

Both have passed the Senate in the 105th and 106th Congress.
  I urge my colleagues who have supported this concept in the past to 
co-sponsor our legislation. I urge those of you who are new to this 
issue to review this legislation and ask yourselves if American 
consumers deserve this basic level of information about their food 
supply--the country of origin.
  I ask for your support, and I look forward to working with my 
colleagues on the Senate Agriculture Committee to move this legislation 
expeditiously through the Committee process.
                                 ______
                                 
      By Mr. HARKIN (for himself and Mr. Lugar):
  S. 282. A bill to establish in the Antitrust Division of the 
Department of Justice a position with responsibility for agriculture 
antitrust matters; to the Committee on the Judiciary.
  Mr. HARKIN. Mr. President, I am pleased to introduce today, along 
with Senator Lugar, legislation that would ensure that there is in the 
Antitrust Division of the Department of Justice a position with the 
primary responsibility of providing advice and assistance to further 
effective enforcement of the antitrust laws in the food and 
agricultural sectors of our economy.
  As so many of my colleagues understand, we are in a period of very 
rapid change in the economic structure of agriculture and of our food 
system from the farm on through retail distribution. Those changes 
include sweeping consolidation and greatly increased economic 
concentration in many segments of our nation's food and agriculture 
system that have profoundly affected agricultural producers and rural 
communities and raised serious questions about impacts on consumers.
  The purpose of this bill is to ensure that our nation's antitrust 
laws are fully enforced during this time of rapid change in our food 
and agriculture system. This is the same legislation as Senator Lugar 
and I introduced late in 1999. Following that introduction, the Clinton 
Administration did appoint a person to fill the position required by 
this legislation. While that action obviated the necessity of enacting 
the legislation at that time, we do not know for certain what the 
present or future administrations may do in assigning personnel at the 
Department of Justice to antitrust enforcement in agriculture. This 
bill is an important safeguard to ensure that we have a person who is 
devoted full-time at Justice to the critical task of enforcing our 
antitrust laws in the food and agriculture sector.
  I urge my colleagues to support this important legislation.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 282

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

     SECTION 1. ESTABLISHMENT.

       (a) In General.--There shall be established within the 
     Antitrust Division of the Department of Justice a position 
     the primary responsibility of which shall be to provide 
     assistance and advice to the Assistant Attorney General of 
     the Antitrust Division to further the effective enforcement 
     of the antitrust laws with respect to the food and 
     agricultural sectors.
       (b) Appointment.--Not later than 180 days after the date of 
     enactment of this Act, the Attorney General shall appoint a 
     person to the position described in subsection (a).
       (c) Functions.--The responsibilities of the position 
     established under subsection (a) shall include all actions 
     appropriate to furthering effective enforcement of the 
     antitrust laws with respect to the food and agricultural 
     sectors, including--
       (1) assisting and advising with respect to the 
     investigation of possible restraints of trade;
       (2) assisting and advising with respect to the 
     investigation of mergers and acquisitions; and
       (3) ensuring that any investigation described in paragraphs 
     (1) or (2) takes into account the effects of the conduct or 
     transaction under investigation on consumers, agricultural 
     producers and rural communities.

     SEC. 2. ENFORCEMENT AUTHORITY.

       Nothing in this Act shall affect or limit the authority of 
     the Attorney General or the Assistant Attorney General of the 
     Antitrust Division to delegate or assign functions relating 
     to the enforcement of any provision of law.

     SEC. 3. EFFECTIVE PERIOD.

       This Act shall be effective until the date that is 5 years 
     after the date of enactment of this Act.
  Mr. LUGAR. Mr. President, I rise today to join my esteemed colleague 
and Ranking Democratic Member of the Agriculture Committee from Iowa, 
Senator Harkin, in once again introducing legislation to help ensure 
that antitrust laws impacting agriculture are properly enforced.
  Mr. President, the face of rural America is rapidly changing. Ever-
changing technologies, developments in biotechnology and concentration 
in production agriculture and agribusiness are developing a new profile 
in rural areas. Farmers in my home state of Indiana have many questions 
and concerns related to these rapid changes. Many remain to be 
convinced that appropriate oversight of merger and acquisition activity 
in ag business is a reality.
  The intent of this legislation is to establish the Office of Special 
Counsel for Agriculture in the Antitrust Division of the Justice 
Department. While this office will focus on reviewing ag business 
mergers and acquisition activity, it will also serve as an information 
resource for American agriculture producers wanting to provide input on 
antitrust-related issues.
  It is important to note, Mr. President, that shortly after 
introduction of this legislation in 1999, Attorney General Reno, on her 
own initiative, established the Office of Special Counsel for 
Agriculture and appointed Mr. Doug Ross to that position. While the 
perspective of Attorney General Ashcroft is not yet known on this 
matter, this legislation is a signal, a strong statement, that the 
Chairman and the Ranking Democratic Member of the Senate Agriculture 
Committee are in favor of greater transparency and consideration to 
those issues surrounding ag business mergers in the United States.
                                 ______
                                 
      By Mr. McCAIN (for himself, Mr. Edwards, Mr. Kennedy, Mr. l. 
        Chafee, Mr. Graham, Mr. Specter, Mrs. Lincoln, Mr. Harkin, Mr. 
        Baucus, Mr. Torricelli, Mr. Dodd, Mr. Nelson of Florida, and 
        Mr. Schumer):
  S. 283. A bill to amend the Public Health Service Act, the Employee 
Retirement Income Security Act of 1974, and the Internal Revenue Code 
of 1986 to protect consumers in managed care plans and other health 
coverage; to the Committee on Health, Education, Labor, and Pensions.
  S. 284. A bill to amend the Internal Revenue Code of 1986 to provide 
incentives to expand health care coverage for individuals; to the 
Committee on Finance.
  Mr. McCAIN. Mr. President, I ask unanimous consent that the text of 
S. 283 and S. 284 be printed in the Record.
  There being no objection, the bills were ordered to be printed in the 
Record, as follows:

                                 S. 283

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

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Bipartisan 
     Patient Protection Act of 2001''.
       (b) Table of Contents.--The table of contents of this Act 
     is as follows:

Sec. 1. Short title; table of contents.

                    TITLE I--IMPROVING MANAGED CARE

   Subtitle A--Utilization Review; Claims; and Internal and External 
                                Appeals

Sec. 101. Utilization review activities.
Sec. 102. Procedures for initial claims for benefits and prior 
              authorization determinations.
Sec. 103. Internal appeals of claims denials.
Sec. 104. Independent external appeals procedures.

                       Subtitle B--Access to Care

Sec. 111. Consumer choice option.
Sec. 112. Choice of health care professional.
Sec. 113. Access to emergency care.
Sec. 114. Timely access to specialists.
Sec. 115. Patient access to obstetrical and gynecological care.
Sec. 116. Access to pediatric care.
Sec. 117. Continuity of care.
Sec. 118. Access to needed prescription drugs.
Sec. 119. Coverage for individuals participating in approved clinical 
              trials.
Sec. 120. Required coverage for minimum hospital stay for mastectomies 
              and lymph node dissections for the treatment of breast 
              cancer and coverage for secondary consultations.

                   Subtitle C--Access to Information

Sec. 121. Patient access to information.

[[Page S1137]]

         Subtitle D--Protecting the Doctor-Patient Relationship

Sec. 131. Prohibition of interference with certain medical 
              communications.
Sec. 132. Prohibition of discrimination against providers based on 
              licensure.
Sec. 133. Prohibition against improper incentive arrangements.
Sec. 134. Payment of claims.
Sec. 135. Protection for patient advocacy.

                        Subtitle E--Definitions

Sec. 151. Definitions.
Sec. 152. Preemption; State flexibility; construction.
Sec. 153. Exclusions.
Sec. 154. Coverage of limited scope plans.
Sec. 155. Regulations.
Sec. 156. Incorporation into plan or coverage documents.

 TITLE II--APPLICATION OF QUALITY CARE STANDARDS TO GROUP HEALTH PLANS 
   AND HEALTH INSURANCE COVERAGE UNDER THE PUBLIC HEALTH SERVICE ACT

Sec. 201. Application to group health plans and group health insurance 
              coverage.
Sec. 202. Application to individual health insurance coverage.

TITLE III--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.
Sec. 302. Availability of civil remedies.
Sec. 303. Limitations on actions.

       TITLE IV--AMENDMENTS TO THE INTERNAL REVENUE CODE OF 1986

Sec. 401. Application of requirements to group health plans under the 
              Internal Revenue Code of 1986.
Sec. 402. Conforming enforcement for women's health and cancer rights.

        TITLE V--EFFECTIVE DATES; COORDINATION IN IMPLEMENTATION

Sec. 501. Effective dates.
Sec. 502. Coordination in implementation.
Sec. 503. Severability.

                    TITLE I--IMPROVING MANAGED CARE

   Subtitle A--Utilization Review; Claims; and Internal and External 
                                Appeals

     SEC. 101. 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 and section 102.
       (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 use or coverage, 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 with input from a range of 
     appropriate actively practicing health care professionals, as 
     determined by the plan, pursuant to the program. Such 
     criteria shall include written clinical review criteria that 
     are based on valid clinical evidence where available and 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.
       (B) Continuing use of standards in retrospective review.--
     If a health care service has been specifically pre-authorized 
     or approved for a participant, beneficiary, or 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) Review of sample of claims denials.--Such a program 
     shall provide for a periodic evaluation of the clinical 
     appropriateness of at least a sample of denials of claims for 
     benefits.
       (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.
       (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 have received appropriate 
     training in the conduct of such activities under the program.
       (B) 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 encourages denials of claims for benefits.
       (C) Prohibition of conflicts.--Such a program shall not 
     permit a health care professional who is providing 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, including the utilization 
     review administrator, 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 and 
     appropriate.

     SEC. 102. PROCEDURES FOR INITIAL CLAIMS FOR BENEFITS AND 
                   PRIOR AUTHORIZATION DETERMINATIONS.

       (a) Procedures of Initial Claims for Benefits.--
       (1) In general.--A group health plan, or health insurance 
     issuer offering health insurance coverage, shall--
       (A) make a determination on an initial claim for benefits 
     by a participant, beneficiary, or enrollee (or authorized 
     representative) regarding payment or coverage for items or 
     services under the terms and conditions of the plan or 
     coverage involved, including any cost-sharing amount that the 
     participant, beneficiary, or enrollee is required to pay with 
     respect to such claim for benefits; and
       (B) notify a participant, beneficiary, or enrollee (or 
     authorized representative) and the treating health care 
     professional involved regarding a determination on an initial 
     claim for benefits made under the terms and conditions of the 
     plan or coverage, including any cost-sharing amounts that the 
     participant, beneficiary, or enrollee may be required to make 
     with respect to such claim for benefits, and of the right of 
     the participant, beneficiary, or enrollee to an internal 
     appeal under section 103.
       (2) Access to information.--
       (A) Timely provision of necessary information.--With 
     respect to an initial claim for benefits, the participant, 
     beneficiary, or enrollee (or authorized representative) and 
     the treating health care professional (if any) shall provide 
     the plan or issuer with access to information requested by 
     the plan or issuer that is necessary to make a determination 
     relating to the claim. Such access shall be provided not 
     later than 5 days after the date on which the request for 
     information is received, or, in a case described in 
     subparagraph (B) or (C) of subsection (b)(1), by such earlier 
     time as may be necessary to comply with the applicable 
     timeline under such subparagraph.
       (B) Limited effect of failure on plan or issuer's 
     obligations.--Failure of the participant, beneficiary, or 
     enrollee to comply with the requirements of subparagraph (A) 
     shall not remove the obligation of the plan or issuer to make 
     a decision in accordance with the medical exigencies of the 
     case and as soon as possible, based on the available 
     information, and failure to comply with the time limit 
     established by this paragraph shall not remove the obligation 
     of the plan or issuer to comply with the requirements of this 
     section.
       (3) Oral requests.--In the case of a claim for benefits 
     involving an expedited or concurrent determination, a 
     participant, beneficiary, or enrollee (or authorized 
     representative) may make an initial claim for benefits 
     orally, but a group health plan, or health insurance issuer 
     offering health insurance coverage, may require that the 
     participant, beneficiary, or enrollee (or authorized 
     representative) provide written confirmation of such request 
     in a timely manner on a form provided by the plan or issuer. 
     In the case of such an oral request for benefits, the making 
     of the request (and the timing of such request) shall be 
     treated as the making at that time of a claims for such 
     benefits without regard to whether and when a written 
     confirmation of such request is made.
       (b) Timeline for Making Determinations.--
       (1) Prior authorization determination.--
       (A) In general.--A group health plan, or health insurance 
     issuer offering health insurance coverage, shall make a prior 
     authorization determination on a claim for benefits (whether 
     oral or written) in accordance with the medical exigencies of 
     the case and as soon as possible, but in no case later than 
     14

[[Page S1138]]

     days from the date on which the plan or issuer receives 
     information that is reasonably necessary to enable the plan 
     or issuer to make a determination on the request for prior 
     authorization and in no case later than 28 days after the 
     date of the claim for benefits is received.
       (B) Expedited determination.--Notwithstanding subparagraph 
     (A), a group health plan, or health insurance issuer offering 
     health insurance coverage, shall expedite a prior 
     authorization determination on a claim for benefits described 
     in such subparagraph when a request for such an expedited 
     determination is made by a participant, beneficiary, or 
     enrollee (or authorized representative) at any time during 
     the process for making a determination and a health care 
     professional certifies, with the request, that a 
     determination under the procedures described in subparagraph 
     (A) would seriously jeopardize the life or health of the 
     participant, beneficiary, or enrollee or the ability of the 
     participant, beneficiary, or enrollee to maintain or regain 
     maximum function. Such determination shall be made in 
     accordance with the medical exigencies of the case and as 
     soon as possible, but in no case later than 72 hours after 
     the time the request is received by the plan or issuer under 
     this subparagraph.
       (C) Ongoing care.--
       (i) Concurrent review.--

       (I) In general.--Subject to clause (ii), in the case of a 
     concurrent review of ongoing care (including 
     hospitalization), which results in a termination or reduction 
     of such care, the plan or issuer must provide by telephone 
     and in printed form notice of the concurrent review 
     determination to the individual or the individual's designee 
     and the individual's health care provider in accordance with 
     the medical exigencies of the case and as soon as possible, 
     with sufficient time prior to the termination or reduction to 
     allow for an appeal under section 103(b)(3) to be completed 
     before the termination or reduction takes effect.
       (II) Contents of notice.--Such notice shall include, with 
     respect to ongoing health care items and services, the number 
     of ongoing services approved, the new total of approved 
     services, the date of onset of services, and the next review 
     date, if any, as well as a statement of the individual's 
     rights to further appeal.

       (ii) Rule of construction.--Clause (i) shall not be 
     construed as requiring plans or issuers to provide coverage 
     of care that would exceed the coverage limitations for such 
     care.
       (2) Retrospective determination.--A group health plan, or 
     health insurance issuer offering health insurance coverage, 
     shall make a retrospective determination on a claim for 
     benefits in accordance with the medical exigencies of the 
     case and as soon as possible, but not later than 30 days 
     after the date on which the plan or issuer receives 
     information that is reasonably necessary to enable the plan 
     or issuer to make a determination on the claim, or, if 
     earlier, 60 days after the date of receipt of the claim for 
     benefits.
       (c) Notice of a Denial of a Claim for Benefits.--Written 
     notice of a denial made under an initial claim for benefits 
     shall be issued to the participant, beneficiary, or enrollee 
     (or authorized representative) and the treating health care 
     professional in accordance with the medical exigencies of the 
     case and as soon as possible, but in no case later than 2 
     days after the date of the determination (or, in the case 
     described in subparagraph (B) or (C) of subsection (b)(1), 
     within the 72-hour or applicable period referred to in such 
     subparagraph).
       (d) Requirements of Notice of Determinations.--The written 
     notice of a denial of a claim for benefits determination 
     under subsection (c) shall be provided in printed form and 
     written in a manner calculated to be understood by the 
     average participant, beneficiary, or enrollee and shall 
     include--
       (1) the specific reasons for the determination (including a 
     summary of the clinical or scientific evidence used in making 
     the determination);
       (2) the procedures for obtaining additional information 
     concerning the determination; and
       (3) notification of the right to appeal the determination 
     and instructions on how to initiate an appeal in accordance 
     with section 103.
       (e) Definitions.--For purposes of this part:
       (1) Authorized representative.--The term ``authorized 
     representative'' means, with respect to an individual who is 
     a participant, beneficiary, or enrollee, any health care 
     professional or other person acting on behalf of the 
     individual with the individual's consent or without such 
     consent if the individual is medically unable to provide such 
     consent.
       (2) Claim for benefits.--The term ``claim for benefits'' 
     means any request for coverage (including authorization of 
     coverage), for eligibility, or for payment in whole or in 
     part, for an item or service under a group health plan or 
     health insurance coverage.
       (3) Denial of claim for benefits.--The term ``denial'' 
     means, with respect to a claim for benefits, a denial (in 
     whole or in part) of, or a failure to act on a timely basis 
     upon, the claim for benefits and includes a failure to 
     provide benefits (including items and services) required to 
     be provided under this title.
       (4) Treating health care professional.--The term ``treating 
     health care professional'' means, with respect to services to 
     be provided to a participant, beneficiary, or enrollee, a 
     health care professional who is primarily responsible for 
     delivering those services to the participant, beneficiary, or 
     enrollee.

     SEC. 103. INTERNAL APPEALS OF CLAIMS DENIALS.

       (a) Right to Internal Appeal.--
       (1) In general.--A participant, beneficiary, or enrollee 
     (or authorized representative) may appeal any denial of a 
     claim for benefits under section 102 under the procedures 
     described in this section.
       (2) Time for appeal.--
       (A) In general.--A group health plan, or health insurance 
     issuer offering health insurance coverage, shall ensure that 
     a participant, beneficiary, or enrollee (or authorized 
     representative) has a period of not less than 180 days 
     beginning on the date of a denial of a claim for benefits 
     under section 102 in which to appeal such denial under this 
     section.
       (B) Date of denial.--For purposes of subparagraph (A), the 
     date of the denial shall be deemed to be the date as of which 
     the participant, beneficiary, or enrollee knew of the denial 
     of the claim for benefits.
       (3) Failure to act.--The failure of a plan or issuer to 
     issue a determination on a claim for benefits under section 
     102 within the applicable timeline established for such a 
     determination under such section is a denial of a claim for 
     benefits for purposes this subtitle as of the date of the 
     applicable deadline.
       (4) Plan waiver of internal review.--A group health plan, 
     or health insurance issuer offering health insurance 
     coverage, may waive the internal review process under this 
     section. In such case the plan or issuer shall provide notice 
     to the participant, beneficiary, or enrollee (or authorized 
     representative) involved, the participant, beneficiary, or 
     enrollee (or authorized representative) involved shall be 
     relieved of any obligation to complete the internal review 
     involved, and may, at the option of such participant, 
     beneficiary, enrollee, or representative proceed directly to 
     seek further appeal through external review under section 104 
     or otherwise.
       (b) Timelines for Making Determinations.--
       (1) Oral requests.--In the case of an appeal of a denial of 
     a claim for benefits under this section that involves an 
     expedited or concurrent determination, a participant, 
     beneficiary, or enrollee (or authorized representative) may 
     request such appeal orally. A group health plan, or health 
     insurance issuer offering health insurance coverage, may 
     require that the participant, beneficiary, or enrollee (or 
     authorized representative) provide written confirmation of 
     such request in a timely manner on a form provided by the 
     plan or issuer. In the case of such an oral request for an 
     appeal of a denial, the making of the request (and the timing 
     of such request) shall be treated as the making at that time 
     of a request for an appeal without regard to whether and when 
     a written confirmation of such request is made.
       (2) Access to information.--
       (A) Timely provision of necessary information.--With 
     respect to an appeal of a denial of a claim for benefits, the 
     participant, beneficiary, or enrollee (or authorized 
     representative) and the treating health care professional (if 
     any) shall provide the plan or issuer with access to 
     information requested by the plan or issuer that is necessary 
     to make a determination relating to the appeal. Such access 
     shall be provided not later than 5 days after the date on 
     which the request for information is received, or, in a case 
     described in subparagraph (B) or (C) of paragraph (3), by 
     such earlier time as may be necessary to comply with the 
     applicable timeline under such subparagraph.
       (B) Limited effect of failure on plan or issuer's 
     obligations.--Failure of the participant, beneficiary, or 
     enrollee to comply with the requirements of subparagraph (A) 
     shall not remove the obligation of the plan or issuer to make 
     a decision in accordance with the medical exigencies of the 
     case and as soon as possible, based on the available 
     information, and failure to comply with the time limit 
     established by this paragraph shall not remove the obligation 
     of the plan or issuer to comply with the requirements of this 
     section.
       (3) Prior authorization determinations.--
       (A) In general.--A group health plan, or health insurance 
     issuer offering health insurance coverage, shall make a 
     determination on an appeal of a denial of a claim for 
     benefits under this subsection in accordance with the medical 
     exigencies of the case and as soon as possible, but in no 
     case later than 14 days from the date on which the plan or 
     issuer receives information that is reasonably necessary to 
     enable the plan or issuer to make a determination on the 
     appeal and in no case later than 28 days after the date the 
     request for the appeal is received.
       (B) Expedited determination.--Notwithstanding subparagraph 
     (A), a group health plan, or health insurance issuer offering 
     health insurance coverage, shall expedite a prior 
     authorization determination on an appeal of a denial of a 
     claim for benefits described in subparagraph (A), when a 
     request for such an expedited determination is made by a 
     participant, beneficiary, or enrollee (or authorized 
     representative) at any time during the process for making a 
     determination and a health care professional certifies, with 
     the request, that a determination under the procedures 
     described in subparagraph (A)

[[Page S1139]]

     would seriously jeopardize the life or health of the 
     participant, beneficiary, or enrollee or the ability of the 
     participant, beneficiary, or enrollee to maintain or regain 
     maximum function. Such determination shall be made in 
     accordance with the medical exigencies of the case and as 
     soon as possible, but in no case later than 72 hours after 
     the time the request for such appeal is received by the plan 
     or issuer under this subparagraph.
       (C) Ongoing care determinations.--
       (i) In general.--Subject to clause (ii), in the case of a 
     concurrent review determination described in section 
     102(b)(1)(C)(i)(I), which results in a termination or 
     reduction of such care, the plan or issuer must provide 
     notice of the determination on the appeal under this section 
     by telephone and in printed form to the individual or the 
     individual's designee and the individual's health care 
     provider in accordance with the medical exigencies of the 
     case and as soon as possible, with sufficient time prior to 
     the termination or reduction to allow for an external appeal 
     under section 104 to be completed before the termination or 
     reduction takes effect.
       (ii) Rule of construction.--Clause (i) shall not be 
     construed as requiring plans or issuers to provide coverage 
     of care that would exceed the coverage limitations for such 
     care.
       (4) Retrospective determination.--A group health plan, or 
     health insurance issuer offering health insurance coverage, 
     shall make a retrospective determination on an appeal of a 
     claim for benefits in no case later than 30 days after the 
     date on which the plan or issuer receives necessary 
     information that is reasonably necessary to enable the plan 
     or issuer to make a determination on the appeal and in no 
     case later than 60 days after the date the request for the 
     appeal is received.
       (c) Conduct of Review.--
       (1) In general.--A review of a denial of a claim for 
     benefits under this section shall be conducted by an 
     individual with appropriate expertise who was not involved in 
     the initial determination.
       (2) Review of medical decisions by physicians.--A review of 
     an appeal of a denial of a claim for benefits that is based 
     on a lack of medical necessity and appropriateness, or based 
     on an experimental or investigational treatment, or requires 
     an evaluation of medical facts, shall be made by a physician 
     (allopathic or osteopathic) with appropriate expertise 
     (including, in the case of a child, appropriate pediatric 
     expertise) who was not involved in the initial determination.
       (d) Notice of Determination.--
       (1) In general.--Written notice of a determination made 
     under an internal appeal of a denial of a claim for benefits 
     shall be issued to the participant, beneficiary, or enrollee 
     (or authorized representative) and the treating health care 
     professional in accordance with the medical exigencies of the 
     case and as soon as possible, but in no case later than 2 
     days after the date of completion of the review (or, in the 
     case described in subparagraph (B) or (C) of subsection 
     (b)(3), within the 72-hour or applicable period referred to 
     in such subparagraph).
       (2) Final determination.--The decision by a plan or issuer 
     under this section shall be treated as the final 
     determination of the plan or issuer on a denial of a claim 
     for benefits. The failure of a plan or issuer to issue a 
     determination on an appeal of a denial of a claim for 
     benefits under this section within the applicable timeline 
     established for such a determination shall be treated as a 
     final determination on an appeal of a denial of a claim for 
     benefits for purposes of proceeding to external review under 
     section 104.
       (3) Requirements of notice.--With respect to a 
     determination made under this section, the notice described 
     in paragraph (1) shall be provided in printed form and 
     written in a manner calculated to be understood by the 
     average participant, beneficiary, or enrollee and shall 
     include--
       (A) the specific reasons for the determination (including a 
     summary of the clinical or scientific evidence used in making 
     the determination);
       (B) the procedures for obtaining additional information 
     concerning the determination; and
       (C) notification of the right to an independent external 
     review under section 104 and instructions on how to initiate 
     such a review.

     SEC. 104. INDEPENDENT EXTERNAL APPEALS PROCEDURES.

       (a) Right to External Appeal.--A group health plan, and a 
     health insurance issuer offering health insurance coverage, 
     shall provide in accordance with this section participants, 
     beneficiaries, and enrollees (or authorized representatives) 
     with access to an independent external review for any denial 
     of a claim for benefits.
       (b) Initiation of the Independent External Review 
     Process.--
       (1) Time to file.--A request for an independent external 
     review under this section shall be filed with the plan or 
     issuer not later than 180 days after the date on which the 
     participant, beneficiary, or enrollee receives notice of the 
     denial under section 103(d) or notice of waiver of internal 
     review under section 103(a)(4) or the date on which the plan 
     or issuer has failed to make a timely decision under section 
     103(d)(2) and notifies the participant or beneficiary that it 
     has failed to make a timely decision and that the beneficiary 
     must file an appeal with an external review entity within 180 
     days if the participant or beneficiary desires to file such 
     an appeal.
       (2) Filing of request.--
       (A) In general.--Subject to the succeeding provisions of 
     this subsection, a group health plan, and a health insurance 
     issuer offering health insurance coverage, may--
       (i) except as provided in subparagraph (B)(i), require that 
     a request for review be in writing;
       (ii) limit the filing of such a request to the participant, 
     beneficiary, or enrollee involved (or an authorized 
     representative);
       (iii) except if waived by the plan or issuer under section 
     103(a)(4), condition access to an independent external review 
     under this section upon a final determination of a denial of 
     a claim for benefits under the internal review procedure 
     under section 103;
       (iv) except as provided in subparagraph (B)(ii), require 
     payment of a filing fee to the plan or issuer of a sum that 
     does not exceed $25; and
       (v) require that a request for review include the consent 
     of the participant, beneficiary, or enrollee (or authorized 
     representative) for the release of necessary medical 
     information or records of the participant, beneficiary, or 
     enrollee to the qualified external review entity only for 
     purposes of conducting external review activities.
       (B) Requirements and exception relating to general rule.--
       (i) Oral requests permitted in expedited or concurrent 
     cases.--In the case of an expedited or concurrent external 
     review as provided for under subsection (e), the request may 
     be made orally. A group health plan, or health insurance 
     issuer offering health insurance coverage, may require that 
     the participant, beneficiary, or enrollee (or authorized 
     representative) provide written confirmation of such request 
     in a timely manner on a form provided by the plan or issuer. 
     Such written confirmation shall be treated as a consent for 
     purposes of subparagraph (A)(v). In the case of such an oral 
     request for such a review, the making of the request (and the 
     timing of such request) shall be treated as the making at 
     that time of a request for such an external review without 
     regard to whether and when a written confirmation of such 
     request is made.
       (ii) Exception to filing fee requirement.--

       (I) Indigency.--Payment of a filing fee shall not be 
     required under subparagraph (A)(iv) where there is a 
     certification (in a form and manner specified in guidelines 
     established by the appropriate Secretary) that the 
     participant, beneficiary, or enrollee is indigent (as defined 
     in such guidelines).
       (II) Fee not required.--Payment of a filing fee shall not 
     be required under subparagraph (A)(iv) if the plan or issuer 
     waives the internal appeals process under section 103(a)(4).
       (III) Refunding of fee.--The filing fee paid under 
     subparagraph (A)(iv) shall be refunded if the determination 
     under the independent external review is to reverse or modify 
     the denial which is the subject of the review.
       (IV) Collection of filing fee.--The failure to pay such a 
     filing fee shall not prevent the consideration of a request 
     for review but, subject to the preceding provisions of this 
     clause, shall constitute a legal liability to pay.

       (c) Referral to Qualified External Review Entity Upon 
     Request.--
       (1) In general.--Upon the filing of a request for 
     independent external review with the group health plan, or 
     health insurance issuer offering health insurance coverage, 
     the plan or issuer shall immediately refer such request, and 
     forward the plan or issuer's initial decision (including the 
     information described in section 103(d)(3)(A)), to a 
     qualified external review entity selected in accordance with 
     this section.
       (2) Access to plan or issuer and health professional 
     information.--With respect to an independent external review 
     conducted under this section, the participant, beneficiary, 
     or enrollee (or authorized representative), the plan or 
     issuer, and the treating health care professional (if any) 
     shall provide the external review entity with information 
     that is necessary to conduct a review under this section, as 
     determined and requested by the entity. Such information 
     shall be provided not later than 5 days after the date on 
     which the request for information is received, or, in a case 
     described in clause (ii) or (iii) of subsection (e)(1)(A), by 
     such earlier time as may be necessary to comply with the 
     applicable timeline under such clause.
       (3) Screening of requests by qualified external review 
     entities.--
       (A) In general.--With respect to a request referred to a 
     qualified external review entity under paragraph (1) relating 
     to a denial of a claim for benefits, the entity shall refer 
     such request for the conduct of an independent medical review 
     unless the entity determines that--
       (i) any of the conditions described in clauses (ii) or 
     (iii) of subsection (b)(2)(A) have not been met;
       (ii) the denial of the claim for benefits does not involve 
     a medically reviewable decision under subsection (d)(2);
       (iii) the denial of the claim for benefits relates to a 
     decision regarding whether an individual is a participant, 
     beneficiary, or enrollee who is enrolled under the terms and 
     conditions of the plan or coverage (including the 
     applicability of any waiting period under the plan or 
     coverage); or
       (iv) the denial of the claim for benefits is a decision as 
     to the application of cost-sharing requirements or the 
     application of a specific exclusion or express limitation on 
     the

[[Page S1140]]

     amount, duration, or scope of coverage of items or services 
     under the terms and conditions of the plan or coverage unless 
     the decision is a denial described in subsection (d)(2).

     Upon making a determination that any of clauses (i) through 
     (iv) applies with respect to the request, the entity shall 
     determine that the denial of a claim for benefits involved is 
     not eligible for independent medical review under subsection 
     (d), and shall provide notice in accordance with subparagraph 
     (C).
       (B) Process for making determinations.--
       (i) No deference to prior determinations.--In making 
     determinations under subparagraph (A), there shall be no 
     deference given to determinations made by the plan or issuer 
     or the recommendation of a treating health care professional 
     (if any).
       (ii) Use of appropriate personnel.--A qualified external 
     review entity shall use appropriately qualified personnel to 
     make determinations under this section.
       (C) Notices and general timelines for determination.--
       (i) Notice in case of denial of referral.--If the entity 
     under this paragraph does not make a referral to an 
     independent medical reviewer, the entity shall provide notice 
     to the plan or issuer, the participant, beneficiary, or 
     enrollee (or authorized representative) filing the request, 
     and the treating health care professional (if any) that the 
     denial is not subject to independent medical review. Such 
     notice--

       (I) shall be written (and, in addition, may be provided 
     orally) in a manner calculated to be understood by an average 
     participant or enrollee;
       (II) shall include the reasons for the determination;
       (III) include any relevant terms and conditions of the plan 
     or coverage; and
       (IV) include a description of any further recourse 
     available to the individual.

       (ii) General timeline for determinations.--Upon receipt of 
     information under paragraph (2), the qualified external 
     review entity, and if required the independent medical 
     reviewer, shall make a determination within the overall 
     timeline that is applicable to the case under review as 
     described in subsection (e), except that if the entity 
     determines that a referral to an independent medical reviewer 
     is not required, the entity shall provide notice of such 
     determination to the participant, beneficiary, or enrollee 
     (or authorized representative) within such timeline and 
     within 2 days of the date of such determination.
       (d) Independent Medical Review.--
       (1) In general.--If a qualified external review entity 
     determines under subsection (c) that a denial of a claim for 
     benefits is eligible for independent medical review, the 
     entity shall refer the denial involved to an independent 
     medical reviewer for the conduct of an independent medical 
     review under this subsection.
       (2) Medically reviewable decisions.--A denial of a claim 
     for benefits is eligible for independent medical review if 
     the benefit for the item or service for which the claim is 
     made would be a covered benefit under the terms and 
     conditions of the plan or coverage but for one (or more) of 
     the following determinations:
       (A) Denials based on medical necessity and 
     appropriateness.--A determination that the item or service is 
     not covered because it is not medically necessary and 
     appropriate or based on the application of substantially 
     equivalent terms.
       (B) Denials based on experimental or investigational 
     treatment.--A determination that the item or service is not 
     covered because it is experimental or investigational or 
     based on the application of substantially equivalent terms.
       (C) Denials otherwise based on an evaluation of medical 
     facts.--A determination that the item or service or condition 
     is not covered based on grounds that require an evaluation of 
     the medical facts by a health care professional in the 
     specific case involved to determine the coverage and extent 
     of coverage of the item or service or condition.
       (3) Independent medical review determination.--
       (A) In general.--An independent medical reviewer under this 
     section shall make a new independent determination with 
     respect to whether or not the denial of a claim for a benefit 
     that is the subject of the review should be upheld, reversed, 
     or modified.
       (B) Standard for determination.--The independent medical 
     reviewer's determination relating to the medical necessity 
     and appropriateness, or the experimental or investigation 
     nature, or the evaluation of the medical facts of the item, 
     service, or condition shall be based on the medical condition 
     of the participant, beneficiary, or enrollee (including the 
     medical records of the participant, beneficiary, or enrollee) 
     and valid, relevant scientific evidence and clinical 
     evidence, including peer-reviewed medical literature or 
     findings and including expert opinion.
       (C) No coverage for excluded benefits.--Nothing in this 
     subsection shall be construed to permit an independent 
     medical reviewer to require that a group health plan, or 
     health insurance issuer offering health insurance coverage, 
     provide coverage for items or services for which benefits are 
     specifically excluded or expressly limited under the plan or 
     coverage in the plain language of the plan document (and 
     which are disclosed under section 121(b)(1)(C)) except to the 
     extent that the application or interpretation of the 
     exclusion or limitation involves a determination described in 
     paragraph (2).
       (D) Evidence and information to be used in medical 
     reviews.--In making a determination under this subsection, 
     the independent medical reviewer shall also consider 
     appropriate and available evidence and information, including 
     the following:
       (i) The determination made by the plan or issuer with 
     respect to the claim upon internal review and the evidence, 
     guidelines, or rationale used by the plan or issuer in 
     reaching such determination.
       (ii) The recommendation of the treating health care 
     professional and the evidence, guidelines, and rationale used 
     by the treating health care professional in reaching such 
     recommendation.
       (iii) Additional relevant evidence or information obtained 
     by the reviewer or submitted by the plan, issuer, 
     participant, beneficiary, or enrollee (or an authorized 
     representative), or treating health care professional.
       (iv) The plan or coverage document.
       (E) Independent determination.--In making determinations 
     under this subtitle, a qualified external review entity and 
     an independent medical reviewer shall--
       (i) consider the claim under review without deference to 
     the determinations made by the plan or issuer or the 
     recommendation of the treating health care professional (if 
     any); and
       (ii) consider, but not be bound by the definition used by 
     the plan or issuer of ``medically necessary and 
     appropriate'', or ``experimental or investigational'', or 
     other substantially equivalent terms that are used by the 
     plan or issuer to describe medical necessity and 
     appropriateness or experimental or investigational nature of 
     the treatment.
       (F) Determination of independent medical reviewer.--An 
     independent medical reviewer shall, in accordance with the 
     deadlines described in subsection (e), prepare a written 
     determination to uphold, reverse, or modify the denial under 
     review. Such written determination shall include--
       (i) the determination of the reviewer;
       (ii) the specific reasons of the reviewer for such 
     determination, including a summary of the clinical or 
     scientific evidence used in making the determination; and
       (iii) with respect to a determination to reverse or modify 
     the denial under review, a timeframe within which the plan or 
     issuer must comply with such determination.
       (G) Nonbinding nature of additional recommendations.--In 
     addition to the determination under subparagraph (F), the 
     reviewer may provide the plan or issuer and the treating 
     health care professional with additional recommendations in 
     connection with such a determination, but any such 
     recommendations shall not affect (or be treated as part of) 
     the determination and shall not be binding on the plan or 
     issuer.
       (e) Timelines and Notifications.--
       (1) Timelines for independent medical review.--
       (A) Prior authorization determination.--
       (i) In general.--The independent medical reviewer (or 
     reviewers) shall make a determination on a denial of a claim 
     for benefits that is referred to the reviewer under 
     subsection (c)(3) in accordance with the medical exigencies 
     of the case and as soon as possible, but in no case later 
     than 14 days after the date of receipt of information under 
     subsection (c)(2) if the review involves a prior 
     authorization of items or services and in no case later than 
     21 days after the date the request for external review is 
     received.
       (ii) Expedited determination.--Notwithstanding clause (i) 
     and subject to clause (iii), the independent medical reviewer 
     (or reviewers) shall make an expedited determination on a 
     denial of a claim for benefits described in clause (i), when 
     a request for such an expedited determination is made by a 
     participant, beneficiary, or enrollee (or authorized 
     representative) at any time during the process for making a 
     determination, and a health care professional certifies, with 
     the request, that a determination under the timeline 
     described in clause (i) would seriously jeopardize the life 
     or health of the participant, beneficiary, or enrollee or the 
     ability of the participant, beneficiary, or enrollee to 
     maintain or regain maximum function. Such determination shall 
     be made as soon in accordance with the medical exigencies of 
     the case and as soon as possible, but in no case later than 
     72 hours after the time the request for external review is 
     received by the qualified external review entity.
       (iii) Ongoing care determination.--Notwithstanding clause 
     (i), in the case of a review described in such subclause that 
     involves a termination or reduction of care, the notice of 
     the determination shall be completed not later than 24 hours 
     after the time the request for external review is received by 
     the qualified external review entity and before the end of 
     the approved period of care.
       (B) Retrospective determination.--The independent medical 
     reviewer (or reviewers) shall complete a review in the case 
     of a retrospective determination on an appeal of a denial of 
     a claim for benefits that is referred to the reviewer under 
     subsection (c)(3) in no case later than 30 days after the 
     date of receipt of information under subsection (c)(2) and in 
     no case later than 60 days after the date the request for 
     external review is received by the qualified external review 
     entity.

[[Page S1141]]

       (2) Notification of determination.--The external review 
     entity shall ensure that the plan or issuer, the participant, 
     beneficiary, or enrollee (or authorized representative) and 
     the treating health care professional (if any) receives a 
     copy of the written determination of the independent medical 
     reviewer prepared under subsection (d)(3)(F). Nothing in this 
     paragraph shall be construed as preventing an entity or 
     reviewer from providing an initial oral notice of the 
     reviewer's determination.
       (3) Form of notices.--Determinations and notices under this 
     subsection shall be written in a manner calculated to be 
     understood by an average participant.
       (f) Compliance.--
       (1) Application of determinations.--
       (A) External review determinations binding on plan.--The 
     determinations of an external review entity and an 
     independent medical reviewer under this section shall be 
     binding upon the plan or issuer involved.
       (B) Compliance with determination.--If the determination of 
     an independent medical reviewer is to reverse or modify the 
     denial, the plan or issuer, upon the receipt of such 
     determination, shall authorize coverage to comply with the 
     medical reviewer's determination in accordance with the 
     timeframe established by the medical reviewer.
       (2) Failure to comply.--
       (A) In general.--If a plan or issuer fails to comply with 
     the timeframe established under paragraph (1)(B) with respect 
     to a participant, beneficiary, or enrollee, where such 
     failure to comply is caused by the plan or issuer, the 
     participant, beneficiary, or enrollee may obtain the items or 
     services involved (in a manner consistent with the 
     determination of the independent external reviewer) from any 
     provider regardless of whether such provider is a 
     participating provider under the plan or coverage.
       (B) Reimbursement.--
       (i) In general.--Where a participant, beneficiary, or 
     enrollee obtains items or services in accordance with 
     subparagraph (A), the plan or issuer involved shall provide 
     for reimbursement of the costs of such items or services. 
     Such reimbursement shall be made to the treating health care 
     professional or to the participant, beneficiary, or enrollee 
     (in the case of a participant, beneficiary, or enrollee who 
     pays for the costs of such items or services).
       (ii) Amount.--The plan or issuer shall fully reimburse a 
     professional, participant, beneficiary, or enrollee under 
     clause (i) for the total costs of the items or services 
     provided (regardless of any plan limitations that may apply 
     to the coverage of such items or services) so long as the 
     items or services were provided in a manner consistent with 
     the determination of the independent medical reviewer.
       (C) Failure to reimburse.--Where a plan or issuer fails to 
     provide reimbursement to a professional, participant, 
     beneficiary, or enrollee in accordance with this paragraph, 
     the professional, participant, beneficiary, or enrollee may 
     commence a civil action (or utilize other remedies available 
     under law) to recover only the amount of any such 
     reimbursement that is owed by the plan or issuer and any 
     necessary legal costs or expenses (including attorney's fees) 
     incurred in recovering such reimbursement.
       (D) Available remedies.--The remedies provided under this 
     paragraph are in addition to any other available remedies.
       (3) Penalties against authorized officials for refusing to 
     authorize the determination of an external review entity.--
       (A) Monetary penalties.--
       (i) In general.--In any case in which the determination of 
     an external review entity is not followed by a group health 
     plan, or by a health insurance issuer offering health 
     insurance coverage, any person who, acting in the capacity of 
     authorizing the benefit, causes such refusal may, in the 
     discretion in a court of competent jurisdiction, be liable to 
     an aggrieved participant, beneficiary, or enrollee for a 
     civil penalty in an amount of up to $1,000 a day from the 
     date on which the determination was transmitted to the plan 
     or issuer by the external review entity until the date the 
     refusal to provide the benefit is corrected.
       (ii) Additional penalty for failing to follow timeline.--In 
     any case in which treatment was not commenced by the plan in 
     accordance with the determination of an independent external 
     reviewer, the Secretary shall assess a civil penalty of 
     $10,000 against the plan and the plan shall pay such penalty 
     to the participant, beneficiary, or enrollee involved.
       (B) Cease and desist order and order of attorney's fees.--
     In any action described in subparagraph (A) brought by a 
     participant, beneficiary, or enrollee with respect to a group 
     health plan, or a health insurance issuer offering health 
     insurance coverage, in which a plaintiff alleges that a 
     person referred to in such subparagraph has taken an action 
     resulting in a refusal of a benefit determined by an external 
     appeal entity to be covered, or has failed to take an action 
     for which such person is responsible under the terms and 
     conditions of the plan or coverage and which is necessary 
     under the plan or coverage for authorizing a benefit, the 
     court shall cause to be served on the defendant an order 
     requiring the defendant--
       (i) to cease and desist from the alleged action or failure 
     to act; and
       (ii) to pay to the plaintiff a reasonable attorney's fee 
     and other reasonable costs relating to the prosecution of the 
     action on the charges on which the plaintiff prevails.
       (C) Additional civil penalties.--
       (i) In general.--In addition to any penalty imposed under 
     subparagraph (A) or (B), the appropriate Secretary may assess 
     a civil penalty against a person acting in the capacity of 
     authorizing a benefit determined by an external review entity 
     for one or more group health plans, or health insurance 
     issuers offering health insurance coverage, for--

       (I) any pattern or practice of repeated refusal to 
     authorize a benefit determined by an external appeal entity 
     to be covered; or
       (II) any pattern or practice of repeated violations of the 
     requirements of this section with respect to such plan or 
     coverage.

       (ii) Standard of proof and amount of penalty.--Such penalty 
     shall be payable only upon proof by clear and convincing 
     evidence of such pattern or practice and shall be in an 
     amount not to exceed the lesser of--

       (I) 25 percent of the aggregate value of benefits shown by 
     the appropriate Secretary to have not been provided, or 
     unlawfully delayed, in violation of this section under such 
     pattern or practice; or
       (II) $500,000.

       (D) Removal and disqualification.--Any person acting in the 
     capacity of authorizing benefits who has engaged in any such 
     pattern or practice described in subparagraph (C)(i) with 
     respect to a plan or coverage, upon the petition of the 
     appropriate Secretary, may be removed by the court from such 
     position, and from any other involvement, with respect to 
     such a plan or coverage, and may be precluded from returning 
     to any such position or involvement for a period determined 
     by the court.
       (4) Protection of legal rights.--Nothing in this subsection 
     or subtitle shall be construed as altering or eliminating any 
     cause of action or legal rights or remedies of participants, 
     beneficiaries, enrollees, and others under State or Federal 
     law (including sections 502 and 503 of the Employee 
     Retirement Income Security Act of 1974), including the right 
     to file judicial actions to enforce rights.
       (g) Qualifications of Independent Medical Reviewers.--
       (1) In general.--In referring a denial to 1 or more 
     individuals to conduct independent medical review under 
     subsection (c), the qualified external review entity shall 
     ensure that--
       (A) each independent medical reviewer meets the 
     qualifications described in paragraphs (2) and (3);
       (B) with respect to each review at least 1 such reviewer 
     meets the requirements described in paragraphs (4) and (5); 
     and
       (C) compensation provided by the entity to the reviewer is 
     consistent with paragraph (6).
       (2) Licensure and expertise.--Each independent medical 
     reviewer shall be a physician (allopathic or osteopathic) or 
     health care professional who--
       (A) is appropriately credentialed or licensed in 1 or more 
     States to deliver health care services; and
       (B) typically treats the condition, makes the diagnosis, or 
     provides the type of treatment under review.
       (3) Independence.--
       (A) In general.--Subject to subparagraph (B), each 
     independent medical reviewer in a case shall--
       (i) not be a related party (as defined in paragraph (7));
       (ii) not have a material familial, financial, or 
     professional relationship with such a party; and
       (iii) not otherwise have a conflict of interest with such a 
     party (as determined under regulations).
       (B) Exception.--Nothing in subparagraph (A) shall be 
     construed to--
       (i) prohibit an individual, solely on the basis of 
     affiliation with the plan or issuer, from serving as an 
     independent medical reviewer if--

       (I) a non-affiliated individual is not reasonably 
     available;
       (II) the affiliated individual is not involved in the 
     provision of items or services in the case under review;
       (III) the fact of such an affiliation is disclosed to the 
     plan or issuer and the participant, beneficiary, or enrollee 
     (or authorized representative) and neither party objects; and
       (IV) the affiliated individual is not an employee of the 
     plan or issuer and does not provide services exclusively or 
     primarily to or on behalf of the plan or issuer;

       (ii) prohibit an individual who has staff privileges at the 
     institution where the treatment involved takes place from 
     serving as an independent medical reviewer merely on the 
     basis of such affiliation if the affiliation is disclosed to 
     the plan or issuer and the participant, beneficiary, or 
     enrollee (or authorized representative), and neither party 
     objects; or
       (iii) prohibit receipt of compensation by an independent 
     medical reviewer from an entity if the compensation is 
     provided consistent with paragraph (6).
       (4) Practicing health care professional in same field.--
       (A) In general.--In a case involving treatment, or the 
     provision of items or services--
       (i) by a physician, a reviewer shall be a practicing 
     physician (allopathic or osteopathic) of the same or similar 
     specialty, as a physician who typically treats the condition, 
     makes the diagnosis, or provides the type of treatment under 
     review; or
       (ii) by a health care professional (other than a 
     physician), a reviewer shall be a practicing physician 
     (allopathic or osteopathic) or, if determined appropriate by 
     the qualified external review entity, a practicing

[[Page S1142]]

     health care professional (other than such a physician), of 
     the same or similar specialty as the health care professional 
     who typically treats the condition, makes the diagnosis, or 
     provides the type of treatment under review.
       (B) Practicing defined.--For purposes of this paragraph, 
     the term ``practicing'' means, with respect to an individual 
     who is a physician or other health care professional that the 
     individual provides health care services to individual 
     patients on average at least 2 days per week.
       (5) Pediatric expertise.--In the case of an external review 
     relating to a child, a reviewer shall have expertise under 
     paragraph (2) in pediatrics.
       (6) Limitations on reviewer compensation.--Compensation 
     provided by a qualified external review entity to an 
     independent medical reviewer in connection with a review 
     under this section shall--
       (A) not exceed a reasonable level; and
       (B) not be contingent on the decision rendered by the 
     reviewer.
       (7) Related party defined.--For purposes of this section, 
     the term ``related party'' means, with respect to a denial of 
     a claim under a plan or coverage relating to a participant, 
     beneficiary, or enrollee, any of the following:
       (A) The plan, plan sponsor, or issuer involved, or any 
     fiduciary, officer, director, or employee of such plan, plan 
     sponsor, or issuer.
       (B) The participant, beneficiary, or enrollee (or 
     authorized representative).
       (C) The health care professional that provides the items or 
     services involved in the denial.
       (D) The institution at which the items or services (or 
     treatment) involved in the denial are provided.
       (E) The manufacturer of any drug or other item that is 
     included in the items or services involved in the denial.
       (F) Any other party determined under any regulations to 
     have a substantial interest in the denial involved.
       (h) Qualified External Review Entities.--
       (1) Selection of qualified external review entities.--
       (A) Limitation on plan or issuer selection.--The 
     appropriate Secretary shall implement procedures--
       (i) to assure that the selection process among qualified 
     external review entities will not create any incentives for 
     external review entities to make a decision in a biased 
     manner; and
       (ii) for auditing a sample of decisions by such entities to 
     assure that no such decisions are made in a biased manner.

     No such selection process under the procedures implemented by 
     the appropriate Secretary may give either the patient or the 
     plan or issuer any ability to determine or influence the 
     selection of a qualified external review entity to review the 
     case of any participant, beneficiary, or enrollee.
       (B) State authority with respect to qualified external 
     review entities for health insurance issuers.--With respect 
     to health insurance issuers offering health insurance 
     coverage 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 a manner determined by the State to 
     assure an unbiased determination.
       (2) Contract with qualified external review entity.--Except 
     as provided in paragraph (1)(B), the external review process 
     of a plan or issuer under this section shall be conducted 
     under a contract between the plan or issuer and 1 or more 
     qualified external review entities (as defined in paragraph 
     (4)(A)).
       (3) Terms and conditions of contract.--The terms and 
     conditions of a contract under paragraph (2) shall--
       (A) 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 
     review activities; and
       (B) provide that the costs of the external review process 
     shall be borne by the plan or issuer.

     Subparagraph (B) shall not be construed as applying to the 
     imposition of a filing fee under subsection (b)(2)(A)(iv) or 
     costs incurred by the participant, beneficiary, or enrollee 
     (or authorized representative) or treating health care 
     professional (if any) in support of the review, including the 
     provision of additional evidence or information.
       (4) Qualifications.--
       (A) In general.--In this section, the term ``qualified 
     external review entity'' means, in relation to a plan or 
     issuer, an entity that is initially certified (and 
     periodically recertified) under subparagraph (C) as meeting 
     the following requirements:
       (i) The entity has (directly or through contracts or other 
     arrangements) sufficient medical, legal, and other expertise 
     and sufficient staffing to carry out duties of a qualified 
     external review entity under this section on a timely basis, 
     including making determinations under subsection (b)(2)(A) 
     and providing for independent medical reviews under 
     subsection (d).
       (ii) The entity is not a plan or issuer or an affiliate or 
     a subsidiary of a plan or issuer, and is not an affiliate or 
     subsidiary of a professional or trade association of plans or 
     issuers or of health care providers.
       (iii) The entity has provided assurances that it will 
     conduct external review activities consistent with the 
     applicable requirements of this section and standards 
     specified in subparagraph (C), including that it will not 
     conduct any external review activities in a case unless the 
     independence requirements of subparagraph (B) are met with 
     respect to the case.
       (iv) The entity has provided assurances that it will 
     provide information in a timely manner under subparagraph 
     (D).
       (v) The entity meets such other requirements as the 
     appropriate Secretary provides by regulation.
       (B) Independence requirements.--
       (i) In general.--Subject to clause (ii), an entity meets 
     the independence requirements of this subparagraph with 
     respect to any case if the entity--

       (I) is not a related party (as defined in subsection 
     (g)(7));
       (II) does not have a material familial, financial, or 
     professional relationship with such a party; and
       (III) does not otherwise have a conflict of interest with 
     such a party (as determined under regulations).

       (ii) Exception for reasonable compensation.--Nothing in 
     clause (i) shall be construed to prohibit receipt by a 
     qualified external review entity of compensation from a plan 
     or issuer for the conduct of external review activities under 
     this section if the compensation is provided consistent with 
     clause (iii).
       (iii) Limitations on entity compensation.--Compensation 
     provided by a plan or issuer to a qualified external review 
     entity in connection with reviews under this section shall--

       (I) not exceed a reasonable level; and
       (II) not be contingent on any decision rendered by the 
     entity or by any independent medical reviewer.

       (C) Certification and recertification process.--
       (i) In general.--The initial certification and 
     recertification of a qualified external review entity shall 
     be made--

       (I) under a process that is recognized or approved by the 
     appropriate Secretary; or
       (II) by a qualified private standard-setting organization 
     that is approved by the appropriate Secretary under clause 
     (iii).

     In taking action under subclause (I), the appropriate 
     Secretary shall give deference to entities that are under 
     contract with the Federal Government or with an applicable 
     State authority to perform functions of the type performed by 
     qualified external review entities.
       (ii) Process.--The appropriate Secretary shall not 
     recognize or approve a process under clause (i)(I) unless the 
     process applies standards (as promulgated in regulations) 
     that ensure that a qualified external review entity--

       (I) will carry out (and has carried out, in the case of 
     recertification) the responsibilities of such an entity in 
     accordance with this section, including meeting applicable 
     deadlines;
       (II) will meet (and has met, in the case of 
     recertification) appropriate indicators of fiscal integrity;
       (III) will maintain (and has maintained, in the case of 
     recertification) appropriate confidentiality with respect to 
     individually identifiable health information obtained in the 
     course of conducting external review activities; and
       (IV) in the case recertification, shall review the matters 
     described in clause (iv).

       (iii) Approval of qualified private standard-setting 
     organizations.--For purposes of clause (i)(II), the 
     appropriate Secretary may approve a qualified private 
     standard-setting organization if such Secretary finds that 
     the organization only certifies (or recertifies) external 
     review entities that meet at least the standards required for 
     the certification (or recertification) of external review 
     entities under clause (ii).
       (iv) Considerations in recertifications.--In conducting 
     recertifications of a qualified external review entity under 
     this paragraph, the appropriate Secretary or organization 
     conducting the recertification shall review compliance of the 
     entity with the requirements for conducting external review 
     activities under this section, including the following:

       (I) Provision of information under subparagraph (D).
       (II) Adherence to applicable deadlines (both by the entity 
     and by independent medical reviewers it refers cases to).
       (III) Compliance with limitations on compensation (with 
     respect to both the entity and independent medical reviewers 
     it refers cases to).
       (IV) Compliance with applicable independence requirements.

       (v) Period of certification or recertification.--A 
     certification or recertification provided under this 
     paragraph shall extend for a period not to exceed 2 years.
       (vi) Revocation.--A certification or recertification under 
     this paragraph may be revoked by the appropriate Secretary or 
     by the organization providing such certification upon a 
     showing of cause.
       (vii) Sufficient number of entities.--The appropriate 
     Secretary shall certify and recertify a number of external 
     review entities which is sufficient to ensure the timely and 
     efficient provision of review services.
       (D) Provision of information.--
       (i) In general.--A qualified external review entity shall 
     provide to the appropriate Secretary, in such manner and at 
     such times as such Secretary may require, such information 
     (relating to the denials which have

[[Page S1143]]

     been referred to the entity for the conduct of external 
     review under this section) as such Secretary determines 
     appropriate to assure compliance with the independence and 
     other requirements of this section to monitor and assess the 
     quality of its external review activities and lack of bias in 
     making determinations. Such information shall include 
     information described in clause (ii) but shall not include 
     individually identifiable medical information.
       (ii) Information to be included.--The information described 
     in this subclause with respect to an entity is as follows:

       (I) The number and types of denials for which a request for 
     review has been received by the entity.
       (II) The disposition by the entity of such denials, 
     including the number referred to a independent medical 
     reviewer and the reasons for such dispositions (including the 
     application of exclusions), on a plan or issuer-specific 
     basis and on a health care specialty-specific basis.
       (III) The length of time in making determinations with 
     respect to such denials.
       (IV) Updated information on the information required to be 
     submitted as a condition of certification with respect to the 
     entity's performance of external review activities.

       (iii) Information to be provided to certifying 
     organization.--

       (I) In general.--In the case of a qualified external review 
     entity which is certified (or recertified) under this 
     subsection by a qualified private standard-setting 
     organization, at the request of the organization, the entity 
     shall provide the organization with the information provided 
     to the appropriate Secretary under clause (i).
       (II) Additional information.--Nothing in this subparagraph 
     shall be construed as preventing such an organization from 
     requiring additional information as a condition of 
     certification or recertification of an entity.

       (iv) Use of information.--Information provided under this 
     subparagraph may be used by the appropriate Secretary and 
     qualified private standard-setting organizations to conduct 
     oversight of qualified external review entities, including 
     recertification of such entities, and shall be made available 
     to the public in an appropriate manner.
       (E) Limitation on liability.--No qualified external review 
     entity having a contract with a plan or issuer, and no person 
     who is employed by any such entity or who furnishes 
     professional services to such entity (including as an 
     independent medical reviewer), shall be held by reason of the 
     performance of any duty, function, or activity required or 
     authorized pursuant to this section, to be civilly liable 
     under any law of the United States or of any State (or 
     political subdivision thereof) if there was no actual malice 
     or gross misconduct in the performance of such duty, 
     function, or activity.

                       Subtitle B--Access to Care

     SEC. 111. CONSUMER CHOICE OPTION.

       (a) In General.--If--
       (1) a health insurance issuer providing health insurance 
     coverage in connection with a group health plan offers to 
     enrollees health insurance coverage which provides for 
     coverage of services only if such services are furnished 
     through health care professionals and providers who are 
     members of a network of health care professionals and 
     providers who have entered into a contract with the issuer to 
     provide such services, or
       (2) a group health plan offers to participants or 
     beneficiaries health benefits which provide for coverage of 
     services only if such services are furnished through health 
     care professionals and providers who are members of a network 
     of health care professionals and providers who have entered 
     into a contract with the plan to provide such services,

     then the issuer or plan shall also offer or arrange to be 
     offered to such enrollees, participants, or beneficiaries (at 
     the time of enrollment and during an annual open season as 
     provided under subsection (c)) the option of health insurance 
     coverage or health benefits which provide for coverage of 
     such services which are not furnished through health care 
     professionals and providers who are members of such a network 
     unless such enrollees, participants, or beneficiaries are 
     offered such non-network coverage through another group 
     health plan or through another health insurance issuer in the 
     group market.
       (b) Additional Costs.--The amount of any additional premium 
     charged by the health insurance issuer or group health plan 
     for the additional cost of the creation and maintenance of 
     the option described in subsection (a) and the amount of any 
     additional cost sharing imposed under such option shall be 
     borne by the enrollee, participant, or beneficiary unless it 
     is paid by the health plan sponsor or group health plan 
     through agreement with the health insurance issuer.
       (c) Open Season.--An enrollee, participant, or beneficiary, 
     may change to the offering provided under this section only 
     during a time period determined by the health insurance 
     issuer or group health plan. Such time period shall occur at 
     least annually.

     SEC. 112. CHOICE OF HEALTH CARE PROFESSIONAL.

       (a) Primary Care.--If a group health plan, or a health 
     insurance issuer that offers health insurance coverage, 
     requires or provides for designation by a participant, 
     beneficiary, or enrollee of a participating primary care 
     provider, then the plan or issuer shall permit each 
     participant, beneficiary, and enrollee to designate 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 and 
     appropriate specialty care, pursuant to appropriate referral 
     procedures, from any qualified participating health care 
     professional 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 health care professionals with respect to such 
     care.
       (3) Construction.--Nothing in this subsection shall be 
     construed as affecting the application of section 114 
     (relating to access to specialty care).

     SEC. 113. 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 or covers any benefits with respect to services in 
     an emergency department of a hospital, the plan or issuer 
     shall cover emergency services (as defined in paragraph 
     (2)(B))--
       (A) without the need for any prior authorization 
     determination;
       (B) whether 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--
       (i) by a nonparticipating health care provider with or 
     without prior authorization, or
       (ii) by a participating health care provider without prior 
     authorization,

     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 with prior authorization; 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.--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, with respect to an emergency medical condition--
       (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 such emergency medical 
     condition, 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.
       (C) Stabilize.--The term ``to stabilize'', with respect to 
     an emergency medical condition (as defined in subparagraph 
     (A)), has the meaning given in section 1867(e)(3) of the 
     Social Security Act (42 U.S.C. 1395dd(e)(3)).
       (b) Reimbursement for Maintenance Care and Post-
     Stabilization Care.--A group health plan, and health 
     insurance coverage offered by a health insurance issuer, must 
     provide reimbursement for maintenance care and post-
     stabilization care in accordance with the requirements of 
     section 1852(d)(2) of the Social Security Act (42 U.S.C. 
     1395w-22(d)(2)). Such reimbursement shall be provided in a 
     manner consistent with subsection (a)(1)(C).
       (c) Coverage of Emergency Ambulance Services.--
       (1) In general.--If a group health plan, or health 
     insurance coverage provided by a health insurance issuer, 
     provides any benefits with respect to ambulance services and 
     emergency services, the plan or issuer shall cover emergency 
     ambulance services (as defined in paragraph (2)) furnished 
     under the plan or coverage under the same terms and 
     conditions under subparagraphs (A) through (D) of subsection 
     (a)(1) under which coverage is provided for emergency 
     services.
       (2) Emergency ambulance services.--For purposes of this 
     subsection, the term ``emergency ambulance services'' means 
     ambulance services (as defined for purposes of section 
     1861(s)(7) of the Social Security Act) furnished to transport 
     an individual who has an emergency medical condition (as 
     defined in subsection (a)(2)(A)) to a hospital for the 
     receipt of emergency services (as defined in subsection 
     (a)(2)(B)) in a case in which the emergency services are 
     covered under the plan or coverage pursuant to subsection 
     (a)(1) and a prudent layperson, with an average knowledge of 
     health and medicine, could reasonably expect that the absence 
     of such transport would result in placing the health of the 
     individual in serious jeopardy, serious

[[Page S1144]]

     impairment of bodily function, or serious dysfunction of any 
     bodily organ or part.

     SEC. 114. TIMELY ACCESS TO SPECIALISTS.

       (a) Timely Access.--
       (1) In general.--A group health plan or health insurance 
     issuer offering health insurance coverage shall ensure that 
     participants, beneficiaries, and enrollees receive timely 
     access to specialists who are appropriate to the condition 
     of, and accessible to, the participant, beneficiary, or 
     enrollee, when such specialty care is a covered benefit under 
     the plan or coverage.
       (2) Rule of construction.--Nothing in paragraph (1) shall 
     be construed--
       (A) to require the coverage under a group health plan or 
     health insurance coverage of benefits or services;
       (B) to prohibit a plan or issuer from including providers 
     in the network only to the extent necessary to meet the needs 
     of the plan's or issuer's participants, beneficiaries, or 
     enrollees; or
       (C) to override any State licensure or scope-of-practice 
     law.
       (3) Access to certain providers.--
       (A) In general.--With respect to specialty care under this 
     section, if a participating specialist is not available and 
     qualified to provide such care to the participant, 
     beneficiary, or enrollee, the plan or issuer shall provide 
     for coverage of such care by a nonparticipating specialist.
       (B) Treatment of nonparticipating providers.--If a 
     participant, beneficiary, or enrollee receives care from a 
     nonparticipating specialist pursuant to subparagraph (A), 
     such specialty care shall be provided at no additional cost 
     to the participant, beneficiary, or enrollee beyond what the 
     participant, beneficiary, or enrollee would otherwise pay for 
     such specialty care if provided by a participating 
     specialist.
       (b) Referrals.--
       (1) Authorization.--A group health plan or health insurance 
     issuer may require an authorization in order to obtain 
     coverage for specialty services under this section. Any such 
     authorization--
       (A) shall be for an appropriate duration of time or number 
     of referrals; and
       (B) may not be refused solely because the authorization 
     involves services of a nonparticipating specialist (described 
     in subsection (a)(3)).
       (2) Referrals for ongoing special conditions.--
       (A) In general.--A group health plan or health insurance 
     issuer shall permit a participant, beneficiary, or enrollee 
     who has an ongoing special condition (as defined in 
     subparagraph (B)) to receive a referral to a specialist for 
     the treatment of such condition and such specialist may 
     authorize such referrals, procedures, tests, and other 
     medical services with respect to such condition, or 
     coordinate the care for such condition, subject to the terms 
     of a treatment plan (if any) referred to in subsection (c) 
     with respect to the condition.
       (B) Ongoing special condition defined.--In this subsection, 
     the term ``ongoing special condition'' means a condition or 
     disease that--
       (i) is life-threatening, degenerative, potentially 
     disabling, or congenital; and
       (ii) requires specialized medical care over a prolonged 
     period of time.
       (c) Treatment Plans.--
       (1) In general.--A group health plan or health insurance 
     issuer may require that the specialty care be provided--
       (A) pursuant to a treatment plan, but only if the treatment 
     plan--
       (i) is developed by the specialist, in consultation with 
     the case manager or primary care provider, and the 
     participant, beneficiary, or enrollee, and
       (ii) is approved by the plan or issuer in a timely manner, 
     if the plan or issuer requires such approval; and
       (B) in accordance with applicable quality assurance and 
     utilization review standards of the plan or issuer.
       (2) Notification.--Nothing in paragraph (1) shall be 
     construed as prohibiting a plan or issuer from requiring the 
     specialist to provide the plan or issuer with regular updates 
     on the specialty care provided, as well as all other 
     reasonably necessary medical information.
       (d) Specialist Defined.--For purposes of this section, the 
     term ``specialist'' means, with respect to the condition of 
     the participant, beneficiary, or enrollee, a health care 
     professional, facility, or center 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.

     SEC. 115. PATIENT ACCESS TO OBSTETRIC AND GYNECOLOGICAL CARE.

       (a) General Rights.--
       (1) Direct access.--A group health plan, or health 
     insurance issuer offering health insurance coverage, 
     described in subsection (b) may not require authorization or 
     referral by the plan, issuer, or any person (including a 
     primary care provider described in subsection (b)(2)) in the 
     case of a female participant, beneficiary, or enrollee who 
     seeks coverage for obstetrical or gynecological care provided 
     by a participating health care professional who specializes 
     in obstetrics or gynecology.
       (2) Obstetrical and gynecological care.--A group health 
     plan or health insurance issuer described in subsection (b) 
     shall treat the provision of obstetrical and gynecological 
     care, and the ordering of related obstetrical and 
     gynecological items and services, pursuant to the direct 
     access described under paragraph (1), by a participating 
     health care professional who specializes in obstetrics or 
     gynecology as the authorization of the primary care provider.
       (b) Application of Section.--A group health plan, or health 
     insurance issuer offering health insurance coverage, 
     described in this subsection is a group health plan or 
     coverage that--
       (1) provides coverage for obstetric or gynecologic care; 
     and
       (2) requires the designation by a participant, beneficiary, 
     or enrollee of a participating primary care provider.
       (c) Construction.--Nothing in subsection (a) shall be 
     construed to--
       (1) waive any exclusions of coverage under the terms and 
     conditions of the plan or health insurance coverage with 
     respect to coverage of obstetrical or gynecological care; or
       (2) preclude the group health plan or health insurance 
     issuer involved from requiring that the obstetrical or 
     gynecological provider notify the primary care health care 
     professional or the plan or issuer of treatment decisions.

     SEC. 116. ACCESS TO PEDIATRIC CARE.

       (a) Pediatric Care.--In the case of a person who has a 
     child who is a participant, beneficiary, or enrollee under a 
     group health plan, or health insurance coverage offered by a 
     health insurance issuer, if the plan or issuer requires or 
     provides for the designation of a participating primary care 
     provider for the child, the plan or issuer shall permit such 
     person to designate a physician (allopathic or osteopathic) 
     who specializes in pediatrics as the child's primary care 
     provider if such provider participates in the network of the 
     plan or issuer.
       (b) Construction.--Nothing in subsection (a) shall be 
     construed to waive any exclusions of coverage under the terms 
     and conditions of the plan or health insurance coverage with 
     respect to coverage of pediatric care.

     SEC. 117. CONTINUITY OF CARE.

       (a) Termination of Provider.--
       (1) In general.--If--
       (A) a contract between a group health plan, or a health 
     insurance issuer offering health insurance coverage, and a 
     treating health care provider is terminated (as defined in 
     paragraph (e)(4)), or
       (B) benefits or coverage provided by a health care provider 
     are terminated because of a change in the terms of provider 
     participation in such plan or coverage,

     the plan or issuer shall meet the requirements of paragraph 
     (3) with respect to each continuing care patient.
       (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) Requirements.--The requirements of this paragraph are 
     that the plan or issuer--
       (A) notify the continuing care patient involved, or arrange 
     to have the patient notified pursuant to subsection (d)(2), 
     on a timely basis of the termination described in paragraph 
     (1) (or paragraph (2), if applicable) and the right to elect 
     continued transitional care from the provider under this 
     section;
       (B) provide the patient with an opportunity to notify the 
     plan or issuer of the patient's need for transitional care; 
     and
       (C) subject to subsection (c), permit the patient to elect 
     to continue to be covered with respect to the course of 
     treatment by such provider with the provider's consent during 
     a transitional period (as provided for under subsection (b)).
       (4) Continuing care patient.--For purposes of this section, 
     the term ``continuing care patient'' means a participant, 
     beneficiary, or enrollee who--
       (A) is undergoing a course of treatment for a serious and 
     complex condition from the provider at the time the plan or 
     issuer receives or provides notice of provider, benefit, or 
     coverage termination described in paragraph (1) (or paragraph 
     (2), if applicable);
       (B) is undergoing a course of institutional or inpatient 
     care from the provider at the time of such notice;
       (C) is scheduled to undergo non-elective surgery from the 
     provider at the time of such notice;
       (D) is pregnant and undergoing a course of treatment for 
     the pregnancy from the provider at the time of such notice; 
     or
       (E) is or was determined to be terminally ill (as 
     determined under section 1861(dd)(3)(A) of the Social 
     Security Act) at the time of such notice, but only with 
     respect to a provider that was treating the terminal illness 
     before the date of such notice.
       (b) Transitional Periods.--
       (1) Serious and complex conditions.--The transitional 
     period under this subsection with respect to a continuing 
     care patient described in subsection (a)(4)(A) shall extend 
     for up to 90 days (as determined by the treating health care 
     professional) from the date of the notice described in 
     subsection (a)(3)(A).
       (2) Institutional or inpatient care.--The transitional 
     period under this subsection for

[[Page S1145]]

     a continuing care patient described in subsection (a)(4)(B) 
     shall extend until the earlier of--
       (A) the expiration of the 90-day period beginning on the 
     date on which the notice under subsection (a)(3)(A) is 
     provided; or
       (B) the date of discharge of the patient from such care or 
     the termination of the period of institutionalization, or, if 
     later, the date of completion of reasonable follow-up care.
       (3) Scheduled non-elective surgery.--The transitional 
     period under this subsection for a continuing care patient 
     described in subsection (a)(4)(C) shall extend until the 
     completion of the surgery involved and post-surgical follow-
     up care relating to the surgery and occurring within 90 days 
     after the date of the surgery.
       (4) Pregnancy.--The transitional period under this 
     subsection for a continuing care patient described in 
     subsection (a)(4)(D) shall extend through the provision of 
     post-partum care directly related to the delivery.
       (5) Terminal illness.--The transitional period under this 
     subsection for a continuing care patient described in 
     subsection (a)(4)(E) shall extend for the remainder of the 
     patient's life for care that is directly related to the 
     treatment of the terminal illness or its medical 
     manifestations.
       (c) Permissible Terms and Conditions.--A group health plan 
     or health insurance issuer may condition coverage of 
     continued treatment by a provider under this section upon the 
     provider agreeing to the following terms and conditions:
       (1) The treating health care provider agrees to accept 
     reimbursement from the plan or issuer and continuing care 
     patient 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 
     coverage after the date of the termination of the contract 
     with the group health plan or health insurance issuer) and 
     not to impose cost-sharing with respect to the patient 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 treating health care 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 treating health care 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) Rules of Construction.--Nothing in this section shall 
     be construed--
       (1) to require the coverage of benefits which would not 
     have been covered if the provider involved remained a 
     participating provider; or
       (2) with respect to the termination of a contract under 
     subsection (a) to prevent a group health plan or health 
     insurance issuer from requiring that the health care 
     provider--
       (A) notify participants, beneficiaries, or enrollees of 
     their rights under this section; or
       (B) provide the plan or issuer with the name of each 
     participant, beneficiary, or enrollee who the provider 
     believes is a continuing care patient.
       (e) Definitions.--In this section:
       (1) Contract.--The term ``contract'' includes, with respect 
     to a plan or issuer and a treating health care provider, a 
     contract between such plan or issuer and an organized network 
     of providers that includes the treating health care provider, 
     and (in the case of such a contract) the contract between the 
     treating health care provider and the organized network.
       (2) Health care provider.--The term ``health care 
     provider'' or ``provider'' means--
       (A) any individual who is engaged in the delivery of health 
     care services in a State and who is required by State law or 
     regulation to be licensed or certified by the State to engage 
     in the delivery of such services in the State; and
       (B) any entity that is engaged in the delivery of health 
     care services in a State and that, if it is required by State 
     law or regulation to be licensed or certified by the State to 
     engage in the delivery of such services in the State, is so 
     licensed.
       (3) Serious and complex condition.--The term ``serious and 
     complex condition'' means, with respect to a participant, 
     beneficiary, or enrollee under the plan or coverage--
       (A) in the case of an acute illness, a condition that is 
     serious enough to require specialized medical treatment to 
     avoid the reasonable possibility of death or permanent harm; 
     or
       (B) in the case of a chronic illness or condition, is an 
     ongoing special condition (as defined in section 
     114(b)(2)(B)).
       (4) Terminated.--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 
     for failure to meet applicable quality standards or for 
     fraud.

     SEC. 118. ACCESS TO NEEDED PRESCRIPTION DRUGS.

       (a) In General.--To the extent that a group health plan, or 
     health insurance coverage offered by a health insurance 
     issuer, provides coverage for benefits with respect to 
     prescription drugs, and limits such coverage to drugs 
     included in a formulary, the plan or issuer shall--
       (1) ensure the participation of physicians and pharmacists 
     in developing and reviewing such formulary;
       (2) provide for disclosure of the formulary to providers; 
     and
       (3) in accordance with the applicable quality assurance and 
     utilization review standards of the plan or issuer, provide 
     for exceptions from the formulary limitation when a non-
     formulary alternative is medically necessary and appropriate 
     and, in the case of such an exception, apply the same cost-
     sharing requirements that would have applied in the case of a 
     drug covered under the formulary.
       (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. 119. 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 appropriate 
     Secretary) to be paid for by the sponsors of an approved 
     clinical trial.

[[Page S1146]]

       (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) The Food and Drug Administration.
       (D) 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 appropriate 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. 120. REQUIRED COVERAGE FOR MINIMUM HOSPITAL STAY FOR 
                   MASTECTOMIES AND LYMPH NODE DISSECTIONS FOR THE 
                   TREATMENT OF BREAST CANCER AND COVERAGE FOR 
                   SECONDARY CONSULTATIONS.

       (a) Inpatient Care.--
       (1) In general.--A group health plan, and a health 
     insurance issuer providing 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 consultation with the patient, to 
     be medically necessary and 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) Prohibition on Certain Modifications.--In implementing 
     the requirements of this section, a group health plan, and a 
     health insurance issuer providing health insurance coverage, 
     may not modify the terms and conditions of coverage based on 
     the determination by a participant, beneficiary, or enrollee 
     to request less than the minimum coverage required under 
     subsection (a).
       (c) Secondary Consultations.--
       (1) In general.--A group health plan, and a health 
     insurance issuer providing health insurance coverage, that 
     provides coverage with respect to medical and surgical 
     services provided in relation to the diagnosis and treatment 
     of cancer shall ensure that full coverage is provided for 
     secondary consultations by specialists in the appropriate 
     medical fields (including pathology, radiology, and oncology) 
     to confirm or refute such diagnosis. Such plan or issuer 
     shall ensure that full coverage is provided for such 
     secondary consultation whether such consultation is based on 
     a positive or negative initial diagnosis. In any case in 
     which the attending physician certifies in writing that 
     services necessary for such a secondary consultation are not 
     sufficiently available from specialists operating under the 
     plan or coverage with respect to whose services coverage is 
     otherwise provided under such plan or by such issuer, such 
     plan or issuer shall ensure that coverage is provided with 
     respect to the services necessary for the secondary 
     consultation with any other specialist selected by the 
     attending physician for such purpose at no additional cost to 
     the individual beyond that which the individual would have 
     paid if the specialist was participating in the network of 
     the plan or issuer.
       (2) Exception.--Nothing in paragraph (1) shall be construed 
     as requiring the provision of secondary consultations where 
     the patient determines not to seek such a consultation.
       (d) Prohibition on Penalties or Incentives.--A group health 
     plan, and a health insurance issuer providing health 
     insurance coverage, may not--
       (1) penalize or otherwise reduce or limit the reimbursement 
     of a provider or specialist because the provider or 
     specialist provided care to a participant, beneficiary, or 
     enrollee in accordance with this section;
       (2) provide financial or other incentives to a physician or 
     specialist to induce the physician or specialist to keep the 
     length of inpatient stays of patients following a mastectomy, 
     lumpectomy, or a lymph node dissection for the treatment of 
     breast cancer below certain limits or to limit referrals for 
     secondary consultations; or
       (3) provide financial or other incentives to a physician or 
     specialist to induce the physician or specialist to refrain 
     from referring a participant, beneficiary, or enrollee for a 
     secondary consultation that would otherwise be covered by the 
     plan or coverage involved under subsection (c).

                   Subtitle C--Access to Information

     SEC. 121. PATIENT ACCESS TO INFORMATION.

       (a) Requirement--
       (1) Disclosure.--
       (A) In general.--A group health plan, and a health 
     insurance issuer that provides coverage in connection with 
     health insurance coverage, shall provide for the disclosure 
     to participants, beneficiaries, and enrollees--
       (i) of the information described in subsection (b) at the 
     time of the initial enrollment of the participant, 
     beneficiary, or enrollee under the plan or coverage;
       (ii) of such information on an annual basis--

       (I) in conjunction with the election period of the plan or 
     coverage if the plan or coverage has such an election period; 
     or
       (II) in the case of a plan or coverage that does not have 
     an election period, in conjunction with the beginning of the 
     plan or coverage year; and

       (iii) of information relating to any material reduction to 
     the benefits or information described in such subsection or 
     subsection (c), in the form of a notice provided not later 
     than 30 days before the date on which the reduction takes 
     effect.
       (B) Participants, beneficiaries, and enrollees.--The 
     disclosure required under subparagraph (A) shall be 
     provided--
       (i) jointly to each participant, beneficiary, and enrollee 
     who reside at the same address; or
       (ii) in the case of a beneficiary or enrollee who does not 
     reside at the same address as the participant or another 
     enrollee, separately to the participant or other enrollees 
     and such beneficiary or enrollee.
       (2) Provision of information.--Information shall be 
     provided to participants, beneficiaries, and enrollees under 
     this section at the last known address maintained by the plan 
     or issuer with respect to such participants, beneficiaries, 
     or enrollees, to the extent that such information is provided 
     to participants, beneficiaries, or enrollees via the United 
     States Postal Service or other private delivery service.
       (b) Required Information.--The informational materials to 
     be distributed under this section shall include for each 
     option available under the group health plan or health 
     insurance coverage the following:
       (1) Benefits.--A description of the covered benefits, 
     including--
       (A) any in- and out-of-network benefits;
       (B) specific preventive services covered under the plan or 
     coverage if such services are covered;
       (C) any specific exclusions or express limitations of 
     benefits described in section 104(b)(3)(C);
       (D) any other benefit limitations, including any annual or 
     lifetime benefit limits and any monetary limits or limits on 
     the number of visits, days, or services, and any specific 
     coverage exclusions; and
       (E) any definition of medical necessity used in making 
     coverage determinations by the plan, issuer, or claims 
     administrator.
       (2) Cost sharing.--A description of any cost-sharing 
     requirements, including--
       (A) any premiums, deductibles, coinsurance, copayment 
     amounts, and liability for balance billing, for which the 
     participant, beneficiary, or enrollee will be responsible 
     under each option available under the plan;
       (B) any maximum out-of-pocket expense for which the 
     participant, beneficiary, or enrollee may be liable;
       (C) any cost-sharing requirements for out-of-network 
     benefits or services received from nonparticipating 
     providers; and
       (D) any additional cost-sharing or charges for benefits and 
     services that are furnished without meeting applicable plan 
     or coverage requirements, such as prior authorization or 
     precertification.
       (3) Service area.--A description of the plan or issuer's 
     service area, including the provision of any out-of-area 
     coverage.
       (4) Participating providers.--A directory of participating 
     providers (to the extent a plan or issuer provides coverage 
     through a network of providers) that includes, at a minimum, 
     the name, address, and telephone number of each participating 
     provider, and information about how to inquire whether a 
     participating provider is currently accepting new patients.
       (5) Choice of primary care provider.--A description of any 
     requirements and procedures to be used by participants, 
     beneficiaries, and enrollees in selecting, accessing, or 
     changing their primary care provider, including providers 
     both within and outside of the network (if the plan or issuer 
     permits out-of-network services), and the right to select a 
     pediatrician as a primary care provider under section 116 for 
     a participant, beneficiary, or enrollee who is a child if 
     such section applies.
       (6) Preauthorization requirements.--A description of the 
     requirements and procedures to be used to obtain 
     preauthorization for health services, if such 
     preauthorization is required.
       (7) Experimental and investigational treatments.--A 
     description of the process for determining whether a 
     particular item, service, or treatment is considered 
     experimental or investigational, and the circumstances under 
     which such treatments are covered by the plan or issuer.
       (8) Specialty care.--A description of the requirements and 
     procedures to be used by

[[Page S1147]]

     participants, beneficiaries, and enrollees in accessing 
     specialty care and obtaining referrals to participating and 
     nonparticipating specialists, including any limitations on 
     choice of health care professionals referred to in section 
     112(b)(2) and the right to timely access to specialists care 
     under section 114 if such section applies.
       (9) Clinical trials.--A description the circumstances and 
     conditions under which participation in clinical trials is 
     covered under the terms and conditions of the plan or 
     coverage, and the right to obtain coverage for approved 
     clinical trials under section 119 if such section applies.
       (10) Prescription drugs.--To the extent the plan or issuer 
     provides coverage for prescription drugs, a statement of 
     whether such coverage is limited to drugs included in a 
     formulary, a description of any provisions and cost-sharing 
     required for obtaining on- and off-formulary medications, and 
     a description of the rights of participants, beneficiaries, 
     and enrollees in obtaining access to access to prescription 
     drugs under section 118 if such section applies.
       (11) Emergency services.--A summary of the rules and 
     procedures for accessing emergency services, including the 
     right of a participant, beneficiary, or enrollee to obtain 
     emergency services under the prudent layperson standard under 
     section 113, if such section applies, and any educational 
     information that the plan or issuer may provide regarding the 
     appropriate use of emergency services.
       (12) Claims and appeals.--A description of the plan or 
     issuer's rules and procedures pertaining to claims and 
     appeals, a description of the rights (including deadlines for 
     exercising rights) of participants, beneficiaries, and 
     enrollees under subtitle A in obtaining covered benefits, 
     filing a claim for benefits, and appealing coverage decisions 
     internally and externally (including telephone numbers and 
     mailing addresses of the appropriate authority), and a 
     description of any additional legal rights and remedies 
     available under section 502 of the Employee Retirement Income 
     Security Act of 1974 and applicable State law.
       (13) Advance directives and organ donation.--A description 
     of procedures for advance directives and organ donation 
     decisions if the plan or issuer maintains such procedures.
       (14) Information on plans and issuers.--The name, mailing 
     address, and telephone number or numbers of the plan 
     administrator and the issuer to be used by participants, 
     beneficiaries, and enrollees seeking information about plan 
     or coverage benefits and services, payment of a claim, or 
     authorization for services and treatment. Notice of whether 
     the benefits under the plan or coverage are provided under a 
     contract or policy of insurance issued by an issuer, or 
     whether benefits are provided directly by the plan sponsor 
     who bears the insurance risk.
       (15) Translation services.--A summary description of any 
     translation or interpretation services (including the 
     availability of printed information in languages other than 
     English, audio tapes, or information in Braille) that are 
     available for non-English speakers and participants, 
     beneficiaries, and enrollees with communication disabilities 
     and a description of how to access these items or services.
       (16) Accreditation information.--Any information that is 
     made public by accrediting organizations in the process of 
     accreditation if the plan or issuer is accredited, or any 
     additional quality indicators (such as the results of 
     enrollee satisfaction surveys) that the plan or issuer makes 
     public or makes available to participants, beneficiaries, and 
     enrollees.
       (17) Notice of requirements.--A description of any rights 
     of participants, beneficiaries, and enrollees that are 
     established by the Bipartisan Patient Protection Act of 2001 
     (excluding those described in paragraphs (1) through (16)) if 
     such sections apply. The description required under this 
     paragraph may be combined with the notices of the type 
     described in sections 711(d), 713(b), or 606(a)(1) of the 
     Employee Retirement Income Security Act of 1974 and with any 
     other notice provision that the appropriate Secretary 
     determines may be combined, so long as such combination does 
     not result in any reduction in the information that would 
     otherwise be provided to the recipient.
       (18) Availability of additional information.--A statement 
     that the information described in subsection (c), and 
     instructions on obtaining such information (including 
     telephone numbers and, if available, Internet websites), 
     shall be made available upon request.
       (c) Additional Information.--The informational materials to 
     be provided upon the request of a participant, beneficiary, 
     or enrollee shall include for each option available under a 
     group health plan or health insurance coverage the following:
       (1) Status of providers.--The State licensure status of the 
     plan or issuer's participating health care professionals and 
     participating health care facilities, and, if available, the 
     education, training, specialty qualifications or 
     certifications of such professionals.
       (2) Compensation methods.--A summary description by 
     category of the applicable methods (such as capitation, fee-
     for-service, salary, bundled payments, per diem, or a 
     combination thereof) used for compensating prospective or 
     treating health care professionals (including primary care 
     providers and specialists) and facilities in connection with 
     the provision of health care under the plan or coverage.
       (3) Prescription drugs.--Information about whether a 
     specific prescription medication is included in the formulary 
     of the plan or issuer, if the plan or issuer uses a defined 
     formulary.
       (4) External appeals information.--Aggregate information on 
     the number and outcomes of external medical reviews, relative 
     to the sample size (such as the number of covered lives) 
     under the plan or under the coverage of the issuer.
       (d) Manner of Disclosure.--The information described in 
     this section shall be disclosed in an accessible medium and 
     format that is calculated to be understood by an average 
     participant or enrollee.
       (e) Rules of Construction.--Nothing in this section shall 
     be construed to prohibit a group health plan, or a health 
     insurance issuer in connection with health insurance 
     coverage, from--
       (1) distributing any other additional information 
     determined by the plan or issuer to be important or necessary 
     in assisting participants, beneficiaries, and enrollees in 
     the selection of a health plan or health insurance coverage; 
     and
       (2) complying with the provisions of this section by 
     providing information in brochures, through the Internet or 
     other electronic media, or through other similar means, so 
     long as--
       (A) the disclosure of such information in such form is in 
     accordance with requirements as the appropriate Secretary may 
     impose, and
       (B) in connection with any such disclosure of information 
     through the Internet or other electronic media--
       (i) the recipient has affirmatively consented to the 
     disclosure of such information in such form,
       (ii) the recipient is capable of accessing the information 
     so disclosed on the recipient's individual workstation or at 
     the recipient's home,
       (iii) the recipient retains an ongoing right to receive 
     paper disclosure of such information and receives, in advance 
     of any attempt at disclosure of such information to him or 
     her through the Internet or other electronic media, notice in 
     printed form of such ongoing right and of the proper software 
     required to view information so disclosed, and
       (iv) the plan administrator appropriately ensures that the 
     intended recipient is receiving the information so disclosed 
     and provides the information in printed form if the 
     information is not received..

         Subtitle D--Protecting the Doctor-Patient Relationship

     SEC. 131. PROHIBITION OF INTERFERENCE WITH CERTAIN MEDICAL 
                   COMMUNICATIONS.

       (a) 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 otherwise restrict a health care 
     professional from advising such a participant, beneficiary, 
     or enrollee who is a patient of the professional about the 
     health status of the individual or medical care or treatment 
     for the individual's condition or disease, regardless of 
     whether benefits for such care or treatment are provided 
     under the plan or coverage, if the professional is acting 
     within the lawful scope of practice.
       (b) Nullification.--Any contract provision or agreement 
     that restricts or prohibits medical communications in 
     violation of subsection (a) shall be null and void.

     SEC. 132. PROHIBITION OF DISCRIMINATION AGAINST PROVIDERS 
                   BASED ON LICENSURE.

       (a) In General.--A group health plan, and a health 
     insurance issuer with respect to health insurance coverage, 
     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.
       (b) Construction.--Subsection (a) shall not be construed--
       (1) as requiring the coverage under a group health plan or 
     health insurance coverage of a particular benefit or service 
     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;
       (2) to override any State licensure or scope-of-practice 
     law; or
       (3) as requiring a plan or issuer that offers network 
     coverage to include for participation every willing provider 
     who meets the terms and conditions of the plan or issuer.

     SEC. 133. PROHIBITION AGAINST IMPROPER INCENTIVE 
                   ARRANGEMENTS.

       (a) 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 clauses (i), (ii)(I), and (iii) of 
     subparagraph (A) of such section are met with respect to such 
     a plan.

[[Page S1148]]

       (b) 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.
       (c) Construction.--Nothing in this section shall be 
     construed as prohibiting all capitation and similar 
     arrangements or all provider discount arrangements.

     SEC. 134. PAYMENT OF CLAIMS.

       A group health plan, and a health insurance issuer offering 
     group health insurance coverage, shall provide for prompt 
     payment of claims submitted for health care services or 
     supplies furnished to a participant, beneficiary, or enrollee 
     with respect to benefits covered by the plan or issuer, in a 
     manner consistent with the provisions of section 1842(c)(2) 
     of the Social Security Act (42 U.S.C. 1395u(c)(2)).

     SEC. 135. 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 title.
       (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 for 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.
       (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.

                        Subtitle E--Definitions

     SEC. 151. DEFINITIONS.

       (a) Incorporation of General Definitions.--Except as 
     otherwise provided, the provisions of section 2791 of the 
     Public Health Service Act shall apply for purposes of this 
     title 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 
     term ``appropriate Secretary'' means the Secretary of Health 
     and Human Services in relation to carrying out this title 
     under sections 2706 and 2751 of the Public Health Service Act 
     and the Secretary of Labor in relation to carrying out this 
     title under section 713 of the Employee Retirement Income 
     Security Act of 1974.
       (c) Additional Definitions.--For purposes of this title:
       (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 title, 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.
       (3) Enrollee.--The term ``enrollee'' means, with respect to 
     health insurance coverage offered by a health insurance 
     issuer, an individual enrolled with the issuer to receive 
     such coverage.
       (4) Group health plan.--The term ``group health plan'' has 
     the meaning given such term in section 733(a) of the Employee 
     Retirement Income Security Act of 1974, except that such term 
     includes a employee welfare benefit plan treated as a group 
     health plan under section 732(d) of such Act or defined as 
     such a plan under section 607(1) of such Act.
       (5) Health care professional.--The term ``health care 
     professional'' means an individual who is licensed, 
     accredited, or certified under State law to provide specified 
     health care services and who is operating within the scope of 
     such licensure, accreditation, or certification.
       (6) Health care provider.--The term ``health care 
     provider'' includes a physician or other health care 
     professional, as well as an institutional or other facility 
     or agency that provides health care services and that is 
     licensed, accredited, or certified to provide health care 
     items and services under applicable State law.
       (7) Network.--The term ``network'' means, with respect to a 
     group health plan or health insurance issuer offering health 
     insurance coverage, the participating health care 
     professionals and providers through whom the plan or issuer 
     provides health care items and services to participants, 
     beneficiaries, or enrollees.
       (8) Nonparticipating.--The term ``nonparticipating'' means, 
     with respect to a

[[Page S1149]]

     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.
       (9) Participating.--The term ``participating'' 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 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.
       (10) Prior authorization.--The term ``prior authorization'' 
     means the process of obtaining prior approval from a health 
     insurance issuer or group health plan for the provision or 
     coverage of medical services.
       (11) Terms and conditions.--The term ``terms and 
     conditions'' includes, with respect to a group health plan or 
     health insurance coverage, requirements imposed under this 
     title with respect to the plan or coverage.

     SEC. 152. PREEMPTION; STATE FLEXIBILITY; CONSTRUCTION.

       (a) Continued Applicability of State Law With Respect to 
     Health Insurance Issuers.--
       (1) In general.--Subject to paragraph (2), this title 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 
     or otherwise) except to the extent that such standard or 
     requirement prevents the application of a requirement of this 
     title.
       (2) Continued preemption with respect to group health 
     plans.--Nothing in this title 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.
       (3) Construction.--In applying this section, a State law 
     that provides for equal access to, and availability of, all 
     categories of licensed health care providers and services 
     shall not be treated as preventing the application of any 
     requirement of this title.
       (b) Application of Substantially Equivalent State Laws.--
       (1) In general.--In the case of a State law that imposes, 
     with respect to health insurance coverage offered by a health 
     insurance issuer and with respect to a group health plan that 
     is a non-Federal governmental plan, a requirement that is 
     substantially equivalent (within the meaning of subsection 
     (c)) to a patient protection requirement (as defined in 
     paragraph (3)) and does not prevent the application of other 
     requirements under this Act (except in the case of other 
     substantially equivalent requirements), in applying the 
     requirements of this title under section 2707 and 2753 (as 
     applicable) of the Public Health Service Act (as added by 
     title II), subject to subsection (a)(2)--
       (A) the State law shall not be treated as being superseded 
     under subsection (a); and
       (B) the State law shall apply instead of the patient 
     protection requirement otherwise applicable with respect to 
     health insurance coverage and non-Federal governmental plans.
       (2) Limitation.--In the case of a group health plan covered 
     under title I of the Employee Retirement Income Security Act 
     of 1974, paragraph (1) shall be construed to apply only with 
     respect to the health insurance coverage (if any) offered in 
     connection with the plan.
       (3) Patient protection requirement defined.--For purposes 
     of this section, the term ``patient protection requirement'' 
     means a requirement under this title, and includes (as a 
     single requirement) a group or related set of requirements 
     under a section or similar unit under this title.
       (c) Determinations of Substantial Equivalence.--
       (1) Certification by states.--A State may submit to the 
     Secretary a certification that a State law provides for 
     patient protections that are at least substantially 
     equivalent to one or more patient protection requirements. 
     Such certification shall be accompanied by such information 
     as may be required to permit the Secretary to make the 
     determination described in paragraph (2)(A).
       (2) Review.--
       (A) In general.--The Secretary shall promptly review a 
     certification submitted under paragraph (1) with respect to a 
     State law to determine if the State law provides for at least 
     substantially equivalent and effective patient protections to 
     the patient protection requirement (or requirements) to which 
     the law relates.
       (B) Approval deadlines.--
       (i) Initial review.--Such a certification is considered 
     approved unless the Secretary notifies the State in writing, 
     within 90 days after the date of receipt of the 
     certification, that the certification is disapproved (and the 
     reasons for disapproval) or that specified additional 
     information is needed to make the determination described in 
     subparagraph (A).
       (ii) Additional information.--With respect to a State that 
     has been notified by the Secretary under clause (i) that 
     specified additional information is needed to make the 
     determination described in subparagraph (A), the Secretary 
     shall make the determination within 60 days after the date on 
     which such specified additional information is received by 
     the Secretary.
       (3) Approval.--
       (A) In general.--The Secretary shall approve a 
     certification under paragraph (1) unless--
       (i) the State fails to provide sufficient information to 
     enable the Secretary to make a determination under paragraph 
     (2)(A); or
       (ii) the Secretary determines that the State law involved 
     does not provide for patient protections that are at least 
     substantially equivalent to and as effective as the patient 
     protection requirement (or requirements) to which the law 
     relates.
       (B) State challenge.--A State that has a certification 
     disapproved by the Secretary under subparagraph (A) may 
     challenge such disapproval in the appropriate United States 
     district court.
       (4) Construction.--Nothing in this subsection shall be 
     construed as preventing the certification (and approval of 
     certification) of a State law under this subsection solely 
     because it provides for greater protections for patients than 
     those protections otherwise required to establish substantial 
     equivalence.
       (d) 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 
     District of Columbia, Puerto Rico, the Virgin Islands, Guam, 
     American Samoa, the Northern Mariana Islands, any political 
     subdivisions of such, or any agency or instrumentality of 
     such.

     SEC. 153. EXCLUSIONS.

       (a) No Benefit Requirements.--Nothing in this title shall 
     be construed to require a group health plan or a health 
     insurance issuer offering health insurance coverage to 
     include specific items and services under the terms of such a 
     plan or coverage, other than those provided under the terms 
     and conditions of such plan or coverage.
       (b) Exclusion from Access to Care Managed Care Provisions 
     for Fee-for-Service Coverage.--
       (1) In general.--The provisions of sections 111 through 117 
     shall not apply to a group health plan or health insurance 
     coverage if the only coverage offered under the plan or 
     coverage is fee-for-service coverage (as defined in paragraph 
     (2)).
       (2) Fee-for-service coverage defined.--For purposes of this 
     subsection, the term ``fee-for-service coverage'' means 
     coverage under a group health plan or health insurance 
     coverage that--
       (A) reimburses hospitals, health professionals, and other 
     providers on a fee-for-service basis without placing the 
     provider at financial risk;
       (B) does not vary reimbursement for such a provider based 
     on an agreement to contract terms and conditions or the 
     utilization of health care items or services relating to such 
     provider;
       (C) allows access to any provider that is lawfully 
     authorized to provide the covered services and that agrees to 
     accept the terms and conditions of payment established under 
     the plan or by the issuer; and
       (D) for which the plan or issuer does not require prior 
     authorization before providing for any health care services.

     SEC. 154. COVERAGE OF LIMITED SCOPE PLANS.

       Only for purposes of applying the requirements of this 
     title under sections 2707 and 2753 of the Public Health 
     Service Act and section 714 of the Employee Retirement Income 
     Security Act of 1974, section 2791(c)(2)(A), and section 
     733(c)(2)(A) of the Employee Retirement Income Security Act 
     of 1974 shall be deemed not to apply.

     SEC. 155. REGULATIONS.

       The Secretaries of Health and Human Services and Labor 
     shall issue such regulations as may be necessary or 
     appropriate to carry out this title. 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 title.

     SEC. 156. INCORPORATION INTO PLAN OR COVERAGE DOCUMENTS.

       The requirements of this title with respect to a group 
     health plan or health insurance coverage are deemed to be 
     incorporated into, and made a part of, such plan or the 
     policy, certificate, or contract providing such coverage and 
     are enforceable under law as if directly included in the 
     documentation of such plan or such policy, certificate, or 
     contract.

 TITLE II--APPLICATION OF QUALITY CARE STANDARDS TO GROUP HEALTH PLANS 
   AND HEALTH INSURANCE COVERAGE UNDER THE 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. 2707. PATIENT PROTECTION STANDARDS.

       ``Each group health plan shall comply with patient 
     protection requirements under title I of the Bipartisan 
     Patient Protection Act of

[[Page S1150]]

     2001, and each health insurance issuer shall comply with 
     patient protection requirements under such title with respect 
     to group health insurance coverage it offers, and such 
     requirements shall be deemed to be incorporated into this 
     subsection.''.
       (b) Conforming Amendment.--Section 2721(b)(2)(A) of such 
     Act (42 U.S.C. 300gg-21(b)(2)(A)) is amended by inserting 
     ``(other than section 2707)'' 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 2752 the following new 
     section:

     ``SEC. 2753. PATIENT PROTECTION STANDARDS.

       ``Each health insurance issuer shall comply with patient 
     protection requirements under title I of the Bipartisan 
     Patient Protection Act of 2001 with respect to individual 
     health insurance coverage it offers, and such requirements 
     shall be deemed to be incorporated into this subsection.''.

TITLE III--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.

       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. 714. 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 title I of the 
     Bipartisan Patient Protection Act of 2001 (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 title I of the Bipartisan Patient Protection Act of 2001 
     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 111 (relating to consumer choice option).
       ``(B) Section 112 (relating to choice of health care 
     professional).
       ``(C) Section 113 (relating to access to emergency care).
       ``(D) Section 114 (relating to timely access to 
     specialists).
       ``(E) Section 115 (relating to patient access to 
     obstetrical and gynecological care).
       ``(F) Section 116 (relating to access to pediatric care).
       ``(G) Section 117 (relating to continuity of care), but 
     only insofar as a replacement issuer assumes the obligation 
     for continuity of care.
       ``(H) Section 118 (relating to access to needed 
     prescription drugs).
       ``(I) Section 119 (relating to coverage for individuals 
     participating in approved clinical trials).
       ``(J) Section 120 (relating to required coverage for 
     minimum hospital stay for mastectomies and lymph node 
     dissections for the treatment of breast cancer and coverage 
     for secondary consultations).
       ``(K) Section 134 (relating to payment of claims).
       ``(2) Information.--With respect to information required to 
     be provided or made available under section 121 of the 
     Bipartisan Patient Protection Act of 2001, 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) Internal appeals.--With respect to the internal 
     appeals process required to be established under section 103 
     of such Act, 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 process and system (and is not liable for the 
     issuer's failure to provide for such process and system), if 
     the issuer is obligated to provide for (and provides for) 
     such process and system.
       ``(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 104 of such Act, 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 
     of the Bipartisan Patient Protection Act of 2001, the group 
     health plan shall not be liable for such violation unless the 
     plan caused such violation:
       ``(A) Section 131 (relating to prohibition of interference 
     with certain medical communications).
       ``(B) Section 132 (relating to prohibition of 
     discrimination against providers based on licensure).
       ``(C) Section 133 (relating to prohibition against improper 
     incentive arrangements).
       ``(D) Section 135 (relating to protection for patient 
     advocacy).
       ``(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) Treatment of substantially equivalent state laws.--
     For purposes of applying this subsection, any reference in 
     this subsection to a requirement in a section or other 
     provision in the Bipartisan Patient Protection Act of 2001 
     with respect to a health insurance issuer is deemed to 
     include a reference to a requirement under a State law that 
     is substantially equivalent (as determined under section 
     152(c) of such Act) to the requirement in such section or 
     other provisions.
       ``(8) Application to certain prohibitions against 
     retaliation.--With respect to compliance with the 
     requirements of section 135(b)(1) of the Bipartisan Patient 
     Protection Act of 2001, 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 135(b)(1) of 
     the Bipartisan Patient Protection Act of 2001 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 shall issue 
     regulations to coordinate the requirements on group health 
     plans and health insurance issuers under this section with 
     the requirements imposed under the other provisions of this 
     title. In order to reduce duplication and clarify the rights 
     of participants and beneficiaries with respect to information 
     that is required to be provided, such regulations shall 
     coordinate the information disclosure requirements under 
     section 121 of the Bipartisan Patient Protection Act of 2001 
     with the reporting and disclosure requirements imposed under 
     part 1, so long as such coordination does not result in any 
     reduction in the information that would otherwise be provided 
     to participants and beneficiaries.''.
       (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 subtitle A 
     of title I of the Bipartisan Patient Protection Act of 2001, 
     and compliance with regulations promulgated by the Secretary, 
     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 714''.
       (2) The table of contents in section 1 of such Act is 
     amended by inserting after the item relating to section 713 
     the following new item:

``Sec. 714. 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 135(b))'' after 
     ``part 7''.

     SEC. 302. AVAILABILITY OF CIVIL REMEDIES.

       (a) Availability of Federal Civil Remedies in Cases Not 
     Involving Medically Reviewable Decisions.--
       (1) In general.--Section 502 of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1132) is amended by 
     adding at the end the following new subsection:
       ``(n) Cause of Action Relating to Provision of Health 
     Benefits.--
       ``(1) In general.--In any case in which--
       ``(A) a person who is a fiduciary of a group health plan, a 
     health insurance issuer offering health insurance coverage in 
     connection with the plan, or an agent of the plan, issuer, or 
     plan sponsor--
       ``(i) upon consideration of a claim for benefits of a 
     participant or beneficiary under section 102 of the 
     Bipartisan Patient Protection Act of 2001 (relating to 
     procedures for initial claims for benefits and prior 
     authorization determinations) or upon review of a denial of 
     such a claim under section 103 of such Act (relating to 
     internal appeal of a denial of a claim for benefits), fails 
     to exercise ordinary care in making a decision--

[[Page S1151]]

       ``(I) regarding whether an item or service is covered under 
     the terms and conditions of the plan or coverage,
       ``(II) regarding whether an individual is a participant or 
     beneficiary who is enrolled under the terms and conditions of 
     the plan or coverage (including the applicability of any 
     waiting period under the plan or coverage), or
       ``(III) as to the application of cost-sharing requirements 
     or the application of a specific exclusion or express 
     limitation on the amount, duration, or scope of coverage of 
     items or services under the terms and conditions of the plan 
     or coverage, or

       ``(ii) otherwise fails to exercise ordinary care in the 
     performance of a duty under the terms and conditions of the 
     plan with respect to a participant or beneficiary, and
       ``(B) such failure is a proximate cause of personal injury 
     to, or the death of, the participant or beneficiary,
     such person shall be liable to the participant or beneficiary 
     (or the estate of such participant or beneficiary) for 
     economic and noneconomic damages (but not exemplary or 
     punitive damages) in connection with such personal injury or 
     death.
       ``(2) Cause of action must not involve medically reviewable 
     decision.--
       ``(A) In general.--A cause of action is established under 
     paragraph (1)(A) only if the decision referred to in clause 
     (i) or the failure described in clause (ii) does not include 
     a medically reviewable decision.
       ``(B) Medically reviewable decision.--For purposes of 
     subparagraph (A), the term `medically reviewable decision' 
     means a denial of a claim for benefits under the plan which 
     is described in section 104(d)(2) of the Bipartisan Patient 
     Protection Act of 2001 (relating to medically reviewable 
     decisions).
       ``(3) Definitions.--For purposes of this subsection.--
       ``(A) Ordinary care.--The term `ordinary care' means--
       ``(i) with respect to a determination on a claim for 
     benefits, that degree of care, skill, and diligence that a 
     reasonable and prudent individual would exercise in making a 
     fair determination on a claim for benefits of like kind to 
     the claim involved; and
       ``(ii) with respect to the performance of a duty, that 
     degree of care, skill, and diligence that a reasonable and 
     prudent individual would exercise in performing the duty or a 
     duty of like character.
       ``(B) Personal injury.--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.
       ``(C) Claim for benefits; denial.--The terms `claim for 
     benefits' and `denial of a claim for benefits' have the 
     meanings provided such terms in section 102(e) of the 
     Bipartisan Patient Protection Act of 2001.
       ``(D) Terms and conditions.--The term `terms and 
     conditions' includes, with respect to a group health plan or 
     health insurance coverage, requirements imposed under title I 
     of the Bipartisan Patient Protection Act of 2001 or under 
     part 6 or 7.
       ``(E) Group health plan and other related terms.--The 
     provisions of sections 732(d) and 733 apply for purposes of 
     this subsection in the same manner as they apply for purposes 
     of part 7, except that the term `group health plan' includes 
     a group health plan (as defined in section 607(1)).
       ``(4) Exclusion of employers and other plan sponsors.--
       ``(A) Causes of action against employers and plan sponsors 
     precluded.--Subject to subparagraph (B), paragraph (1)(A) 
     does not authorize a cause of action against an employer or 
     other plan sponsor maintaining the plan (or against an 
     employee of such an employer or sponsor acting within the 
     scope of employment).
       ``(B) Certain causes of action permitted.--Notwithstanding 
     subparagraph (A), a cause of action may arise against an 
     employer or other plan sponsor (or against an employee of 
     such an employer or sponsor acting within the scope of 
     employment)--
       ``(i) under clause (i) of paragraph (1)(A), to the extent 
     there was direct participation by the employer or other plan 
     sponsor (or employee) in the decision of the plan under 
     section 102 of the Bipartisan Patient Protection Act of 2001 
     upon consideration of a claim for benefits or under section 
     103 of such Act upon review of a denial of a claim for 
     benefits, or
       ``(ii) under clause (ii) of paragraph (1)(A), to the extent 
     there was direct participation by the employer or other plan 
     sponsor (or employee) in the failure described in such 
     clause.
       ``(C) Direct participation.--
       ``(i) Direct participation in decisions.--For purposes of 
     subparagraph (B), the term `direct participation' means, in 
     connection with a decision described in clause (i) of 
     paragraph (1)(A) or a failure described in clause (ii) of 
     such paragraph, the actual making of such decision or the 
     actual exercise of control in making such decision or in the 
     conduct constituting the failure.
       ``(ii) Rules of construction.--For purposes of clause (i), 
     the employer or plan sponsor (or employee) shall not be 
     construed to be engaged in direct participation because of 
     any form of decisionmaking or other conduct that is merely 
     collateral or precedent to the decision described in clause 
     (i) of paragraph (1)(A) on a particular claim for benefits of 
     a participant or beneficiary or that is merely collateral or 
     precedent to the conduct constituting a failure described in 
     clause (ii) of paragraph (1)(A) with respect to a particular 
     participant or beneficiary, including (but not limited to)--

       ``(I) any participation by the employer or other plan 
     sponsor (or employee) in the selection of the group health 
     plan or health insurance coverage involved or the third party 
     administrator or other agent;
       ``(II) any engagement by the employer or other plan sponsor 
     (or employee) in any cost-benefit analysis undertaken in 
     connection with the selection of, or continued maintenance 
     of, the plan or coverage involved;
       ``(III) any participation by the employer or other plan 
     sponsor (or employee) in the process of creating, continuing, 
     modifying, or terminating the plan or any benefit under the 
     plan, if such process was not substantially focused solely on 
     the particular situation of the participant or beneficiary 
     referred to in paragraph (1)(A); and
       ``(IV) any participation by the employer or other plan 
     sponsor (or employee) in the design of any benefit under the 
     plan, including the amount of copayment and limits connected 
     with such benefit.

       ``(iv) Irrelevance of certain collateral efforts made by 
     employer or plan sponsor.--For purposes of this subparagraph, 
     an employer or plan sponsor shall not be treated as engaged 
     in direct participation in a decision with respect to any 
     claim for benefits or denial thereof in the case of any 
     particular participant or beneficiary solely by reason of--

       ``(I) any efforts that may have been made by the employer 
     or plan sponsor to advocate for authorization of coverage for 
     that or any other participant or beneficiary (or any group of 
     participants or beneficiaries), or
       ``(II) any provision that may have been made by the 
     employer or plan sponsor for benefits which are not covered 
     under the terms and conditions of the plan for that or any 
     other participant or beneficiary (or any group of 
     participants or beneficiaries).

       ``(5) Requirement of exhaustion.--
       ``(A) In general.--Except as provided in this paragraph, a 
     cause of action may not be brought under paragraph (1) in 
     connection with any denial of a claim for benefits of any 
     individual until all administrative processes under sections 
     102 and 103 of the Bipartisan Patient Protection Act of 2001 
     (if applicable) have been exhausted.
       ``(B) Late manifestation of injury.--The requirements under 
     subparagraph (A) for a cause of action in connection with any 
     denial of a claim for benefits shall be deemed satisfied, 
     notwithstanding any failure to timely commence review under 
     section 103 with respect to the denial, if the personal 
     injury is first known (or first reasonably should have been 
     known) to the individual (or the death occurs) after the 
     latest date by which the applicable requirements of 
     subparagraph (A) can be met in connection with such denial.
       ``(C) Occurrence of immediate and irreparable harm or death 
     prior to completion of process.--
       ``(i) In general.--The requirements of subparagraph (A) 
     shall not apply if the action involves an allegation that 
     immediate and irreparable harm or death was, or would be, 
     caused by the denial of a claim for benefits prior to the 
     completion of the administrative processes referred to in 
     subparagraph (A) with respect to such denial.
       ``(ii) Construction.--Nothing in clause (i) shall be 
     construed to preclude--

       ``(I) continuation of such processes to their conclusion if 
     so moved by any party, and
       ``(II) consideration in such action of the final decisions 
     issued in such processes.

       ``(iii) Definition.--In clause (i), the term `irreparable 
     harm', with respect to an individual, means an injury or 
     condition that, regardless of whether the individual receives 
     the treatment that is the subject of the denial, cannot be 
     repaired in a manner that would restore the individual to the 
     individual's pre-injured condition.
       ``(D) Receipt of benefits during appeals process.--Receipt 
     by the participant or beneficiary of the benefits involved in 
     the claim for benefits during the pendency of any 
     administrative processes referred to in subparagraph (A) or 
     of any action commenced under this subsection--
       ``(i) shall not preclude continuation of all such 
     administrative processes to their conclusion if so moved by 
     any party, and
       ``(ii) shall not preclude any liability under subsection 
     (a)(1)(C) and this subsection in connection with such claim.
     The court in any action commenced under this subsection shall 
     take into account any receipt of benefits during such 
     administrative processes or such action in determining the 
     amount of the damages awarded.
       ``(6) Statutory damages.--
       ``(A) In general.--The remedies set forth in this 
     subsection (n) shall be the exclusive remedies for causes of 
     action brought under this subsection.
       ``(B) Assessment of civil penalties.--In addition to the 
     remedies provided for in paragraph (1) (relating to the 
     failure to provide contract benefits in accordance with the 
     plan), a civil assessment, in an amount not to exceed 
     $5,000,000, payable to the claimant may be awarded in any 
     action under such paragraph if the claimant establishes by 
     clear and convincing evidence that the alleged conduct 
     carried out by the defendant demonstrated bad faith and 
     flagrant disregard for the rights of the participant or 
     beneficiary under the plan and was a proximate cause of the 
     personal injury or death that is the subject of the claim.

[[Page S1152]]

       ``(7) Limitation of action.--Paragraph (1) shall not apply 
     in connection with any action commenced after 3 years after 
     the later of--
       ``(A) the date on which the plaintiff first knew, or 
     reasonably should have known, of the personal injury or death 
     resulting from the failure described in paragraph (1), or
       ``(B) the date as of which the requirements of paragraph 
     (5) are first met.
       ``(8) Tolling provision.--The statute of limitations for 
     any cause of action arising under State law relating to a 
     denial of a claim for benefits that is the subject of an 
     action brought in Federal court under this subsection shall 
     be tolled until such time as the Federal court makes a final 
     disposition, including all appeals, of whether such claim 
     should properly be within the jurisdiction of the Federal 
     court. The tolling period shall be determined by the 
     applicable Federal or State law, whichever period is greater.
       ``(10) Purchase of insurance to cover liability.--Nothing 
     in section 410 shall be construed to preclude the purchase by 
     a group health plan of insurance to cover any liability or 
     losses arising under a cause of action under subsection 
     (a)(1)(C) and this subsection.
       ``(11) Exclusion of directed recordkeepers.--
       ``(A) In general.--Subject to subparagraph (C), paragraph 
     (1) shall not apply with respect to a directed recordkeeper 
     in connection with a group health plan.
       ``(B) Directed recordkeeper.--For purposes of this 
     paragraph, the term `directed recordkeeper' means, in 
     connection with a group health plan, a person engaged in 
     directed recordkeeping activities pursuant to the specific 
     instructions of the plan or the employer or other plan 
     sponsor, including the distribution of enrollment information 
     and distribution of disclosure materials under this Act or 
     title I of the Bipartisan Patient Protection Act of 2001 and 
     whose duties do not include making decisions on claims for 
     benefits.
       ``(C) Limitation.--Subparagraph (A) does not apply in 
     connection with any directed recordkeeper to the extent that 
     the directed recordkeeper fails to follow the specific 
     instruction of the plan or the employer or other plan 
     sponsor.
       ``(12) No effect on state law.--No provision of State law 
     (as defined in section 514(c)(1)) shall be treated as 
     superseded or otherwise altered, amended, modified, 
     invalidated, or impaired by reason of the provisions of 
     subsection (a)(1)(C) and this subsection.''.
       (2) Conforming amendment.--Section 502(a)(1) of such Act 
     (29 U.S.C. 1132(a)(1)) is amended--
       (A) by striking ``or'' at the end of subparagraph (A);
       (B) in subparagraph (B), by striking ``plan;'' and 
     inserting ``plan, or''; and
       (C) by adding at the end the following new subparagraph:
       ``(C) for the relief provided for in subsection (n) of this 
     section.''.
       (b) Rules Relating to ERISA Preemption.--Section 514 of the 
     Employee Retirement Income Security Act of 1974 (29 U.S.C. 
     1144) is amended--
       (1) by redesignating subsection (d) as subsection (f); and
       (2) by inserting after subsection (c) the following new 
     subsections:
       ``(d) Preemption Not To Apply to Causes of Action under 
     State Law Involving Medically Reviewable Decision.--
       ``(1) Non-preemption of certain causes of action.--
       ``(A) In general.--Except as provided in this subsection, 
     nothing in this title (including section 502) shall be 
     construed to supersede or otherwise alter, amend, modify, 
     invalidate, or impair any cause of action under State law of 
     a participant or beneficiary under a group health plan (or 
     the estate of such a participant or beneficiary) to recover 
     damages resulting from personal injury or for wrongful death 
     against any person if such cause of action arises by reason 
     of a medically reviewable decision.
       ``(B) Medically reviewable decision.--For purposes of 
     subparagraph (A), the term `medically reviewable decision' 
     means a denial of a claim for benefits under the plan which 
     is described in section 104(d)(2) of the Bipartisan Patient 
     Protection Act of 2001 (relating to medically reviewable 
     decisions).
       ``(C) Limitation on punitive damages.--
       ``(i) In general.--Except as provided in clauses (ii) and 
     (iii), with respect to a cause of action described in 
     subparagraph (A) brought with respect to a participant or 
     beneficiary, State law is superseded insofar as it provides 
     any punitive, exemplary, or similar damages if, as of the 
     time of the personal injury or death, all the requirements of 
     the following sections of the Bipartisan Patient Protection 
     Act of 2001 were satisfied with respect to the participant or 
     beneficiary:

       ``(I) Section 102 (relating to procedures for initial 
     claims for benefits and prior authorization determinations).
       ``(II) Section 103 of such Act (relating to internal 
     appeals of claims denials).
       ``(III) Section 104 of such Act (relating to independent 
     external appeals procedures).

       ``(ii) Exception for certain actions for wrongful death.--
     Clause (i) shall not apply with respect to an action for 
     wrongful death if the applicable State law provides (or has 
     been construed to provide) for damages in such an action 
     which are only punitive or exemplary in nature.
       ``(iii) Exception for willful or wanton disregard for the 
     rights or safety of others.--Clause (i) shall not apply with 
     respect to any cause of action described in subparagraph (A) 
     if, in such action, the plaintiff establishes by clear and 
     convincing evidence that conduct carried out by the defendant 
     with willful or wanton disregard for the rights or safety of 
     others was a proximate cause of the personal injury or 
     wrongful death that is the subject of the action.
       ``(3) Definitions.--For purposes of this subsection and 
     subsection (e)--
       ``(A) Group health plan and other related terms.--The 
     provisions of sections 732(d) and 733 apply for purposes of 
     this subsection in the same manner as they apply for purposes 
     of part 7, except that the term `group health plan' includes 
     a group health plan (as defined in section 607(1)).
       ``(B) Personal injury.--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.
       ``(C) Claim for benefit; denial.--The terms `claim for 
     benefits' and `denial of a claim for benefits' shall have the 
     meaning provided such terms under section 102(e) of the 
     Bipartisan Patient Protection Act of 2001.
       ``(4) Exclusion of employers and other plan sponsors.--
       ``(A) Causes of action against employers and plan sponsors 
     precluded.--Subject to subparagraph (B), paragraph (1) does 
     not apply with respect to--
       ``(i) any cause of action against an employer or other plan 
     sponsor maintaining the plan (or against an employee of such 
     an employer or sponsor acting within the scope of 
     employment), or
       ``(ii) a right of recovery, indemnity, or contribution 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 to which paragraph (1) applies.
       ``(B) Certain causes of action permitted.--Notwithstanding 
     subparagraph (A), paragraph (1) applies with respect to any 
     cause of action described in paragraph (1) maintained by a 
     participant or beneficiary against an employer or other plan 
     sponsor (or against an employee of such an employer or 
     sponsor acting within the scope of employment)--
       ``(i) in the case of any cause of action based on a 
     decision of the plan under section 102 of the Bipartisan 
     Patient Protection Act of 2001 upon consideration of a claim 
     for benefits or under section 103 of such Act upon review of 
     a denial of a claim for benefits, to the extent there was 
     direct participation by the employer or other plan sponsor 
     (or employee) in the decision, or
       ``(ii) in the case of any cause of action based on a 
     failure to otherwise perform a duty under the terms and 
     conditions of the plan with respect to a claim for benefits 
     of a participant or beneficiary, to the extent there was 
     direct participation by the employer or other plan sponsor 
     (or employee) in the failure.
       ``(C) Direct participation.--
       ``(i) Direct participation in decisions.--For purposes of 
     subparagraph (B), the term `direct participation' means, in 
     connection with a decision described in subparagraph (B)(i) 
     or a failure described in subparagraph (B)(ii), the actual 
     making of such decision or the actual exercise of control in 
     making such decision or in the conduct constituting the 
     failure.
       ``(ii) Rules of construction.--For purposes of clause (i), 
     the employer or plan sponsor (or employee) shall not be 
     construed to be engaged in direct participation because of 
     any form of decisionmaking or other conduct that is merely 
     collateral or precedent to the decision described in 
     subparagraph (B)(i) on a particular claim for benefits of a 
     particular participant or beneficiary or that is merely 
     collateral or precedent to the conduct constituting a failure 
     described in subparagraph (B)(ii) with respect to a 
     particular participant or beneficiary, including (but not 
     limited to)--

       ``(I) any participation by the employer or other plan 
     sponsor (or employee) in the selection of the group health 
     plan or health insurance coverage involved or the third party 
     administrator or other agent;
       ``(II) any engagement by the employer or other plan sponsor 
     (or employee) in any cost-benefit analysis undertaken in 
     connection with the selection of, or continued maintenance 
     of, the plan or coverage involved;
       ``(III) any participation by the employer or other plan 
     sponsor (or employee) in the process of creating, continuing, 
     modifying, or terminating the plan or any benefit under the 
     plan, if such process was not substantially focused solely on 
     the particular situation of the participant or beneficiary 
     referred to in paragraph (1)(A); and
       ``(IV) any participation by the employer or other plan 
     sponsor (or employee) in the design of any benefit under the 
     plan, including the amount of copayment and limits connected 
     with such benefit.

       ``(iv) Irrelevance of certain collateral efforts made by 
     employer or plan sponsor.--For purposes of this subparagraph, 
     an employer or plan sponsor shall not be treated as engaged 
     in direct participation in a decision with respect to any 
     claim for benefits or denial thereof in the case of any 
     particular participant or beneficiary solely by reason of--

       ``(I) any efforts that may have been made by the employer 
     or plan sponsor to advocate for authorization of coverage for 
     that or any

[[Page S1153]]

     other participant or beneficiary (or any group of 
     participants or beneficiaries), or
       ``(II) any provision that may have been made by the 
     employer or plan sponsor for benefits which are not covered 
     under the terms and conditions of the plan for that or any 
     other participant or beneficiary (or any group of 
     participants or beneficiaries).

       ``(5) Requirement of exhaustion.--
       ``(A) In general.--Except as provided in this paragraph, 
     paragraph (1) shall not apply with respect to a cause of 
     action described in such paragraph in connection with any 
     denial of a claim for benefits of any individual until all 
     administrative processes under sections 102, 103, and 104 of 
     the Bipartisan Patient Protection Act of 2001 (if applicable) 
     have been exhausted.
       ``(B) Late manifestation of injury.--The requirements under 
     subparagraph (A) for a cause of action in connection with any 
     denial of a claim for benefits shall be deemed satisfied, 
     notwithstanding any failure to timely commence review under 
     section 103 or 104 with respect to the denial, if the 
     personal injury is first known (or first should have been 
     known) to the individual (or the death occurs) after the 
     latest date by which the applicable requirements of 
     subparagraph (A) can be met in connection with such denial.
       ``(C) Occurrence of immediate an irreparable harm or death 
     prior to completion of process.--
       ``(i) In general.--The requirements of subparagraph (A) 
     shall not apply if the action involves an allegation that 
     immediate and irreparable harm or death was, or would be, 
     caused by the denial of a claim for benefits prior to the 
     completion of the administrative processes referred to in 
     subparagraph (A) with respect to such denial.
       ``(ii) Construction.--Nothing in clause (i) shall be 
     construed to preclude--

       ``(I) continuation of such processes to their conclusion if 
     so moved by any party, and
       ``(II) consideration in such action of the final decisions 
     issued in such processes.

       ``(iii) Definition.--In clause (i), the term `irreparable 
     harm', with respect to an individual, means an injury or 
     condition that, regardless of whether the individual receives 
     the treatment that is the subject of the denial, cannot be 
     repaired in a manner that would restore the individual to the 
     individual's pre-injured condition.
       ``(D) Receipt of benefits during appeals process.--Receipt 
     by the participant or beneficiary of the benefits involved in 
     the claim for benefits during the pendency of any 
     administrative processes referred to in subparagraph (A) or 
     of any action commenced under this subsection--
       ``(i) shall not preclude continuation of all such 
     administrative processes to their conclusion if so moved by 
     any party, and
       ``(ii) shall not preclude any liability under subsection 
     (a)(1)(C) and this subsection in connection with such claim.
       ``(6) Tolling provision.--The statute of limitations for 
     any cause of action arising under section 502(n) relating to 
     a denial of a claim for benefits that is the subject of an 
     action brought in State court shall be tolled until such time 
     as the State court makes a final disposition, including all 
     appeals, of whether such claim should properly be within the 
     jurisdiction of the State court. The tolling period shall be 
     determined by the applicable Federal or State law, whichever 
     period is greater.
       ``(7) Exclusion of directed recordkeepers.--
       ``(A) In general.--Subject to subparagraph (C), paragraph 
     (1) shall not apply with respect to a directed recordkeeper 
     in connection with a group health plan.
       ``(B) Directed recordkeeper.--For purposes of this 
     paragraph, the term `directed recordkeeper' means, in 
     connection with a group health plan, a person engaged in 
     directed recordkeeping activities pursuant to the specific 
     instructions of the plan or the employer or other plan 
     sponsor, including the distribution of enrollment information 
     and distribution of disclosure materials under this Act or 
     title I of the Bipartisan Patient Protection Act of 2001 and 
     whose duties do not include making decisions on claims for 
     benefits.
       ``(C) Limitation.--Subparagraph (A) does not apply in 
     connection with any directed recordkeeper to the extent that 
     the directed recordkeeper fails to follow the specific 
     instruction of the plan or the employer or other plan 
     sponsor.
       ``(8) Construction.--Nothing in this subsection shall be 
     construed as--
       ``(A) saving from preemption a cause of action under State 
     law for the failure to provide a benefit for an item or 
     service which is specifically excluded under the group health 
     plan involved, except to the extent that--
       ``(i) the application or interpretation of the exclusion 
     involves a determination described in section 104(d)(2) of 
     the Bipartisan Patient Protection Act of 2001, or
       ``(ii) the provision of the benefit for the item or service 
     is required under Federal law or under applicable State law 
     consistent with subsection (b)(2)(B);
       ``(B) preempting a State law which requires an affidavit or 
     certificate of merit in a civil action;
       ``(C) affecting a cause of action or remedy under State law 
     in connection with the provision or arrangement of excepted 
     benefits (as defined in section 733(c)), other than those 
     described in section 733(c)(2)(A); or
       ``(D) affecting a cause of action under State law other 
     than a cause of action described in paragraph (1)(A).
       ``(9) Purchase of insurance to cover liability.--Nothing in 
     section 410 shall be construed to preclude the purchase by a 
     group health plan of insurance to cover any liability or 
     losses arising under a cause of action described in paragraph 
     (1)(A).
       ``(e) Rules of Construction Relating to Health Care.--
     Nothing in this title shall be construed as--
       ``(1) affecting any State law relating to the practice of 
     medicine or the provision of medical care, or affecting any 
     action based upon such a State law,
       ``(2) superseding any State law permitted under section 
     152(b)(1)(A) of the Bipartisan Patient Protection Act of 
     2001, or
       ``(3) affecting any applicable State law with respect to 
     limitations on monetary damages.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to acts and omissions (from which a cause of 
     action arises) occurring on or after the date of the 
     enactment of this Act.

     SEC. 303. LIMITATIONS ON ACTIONS.

       Section 502 of the Employee Retirement Income Security Act 
     of 1974 (29 U.S.C. 1132) (as amended by section 302(a)) is 
     amended further by adding at the end the following new 
     subsection:
       ``(o) Limitations on Actions Relating to Group Health 
     Plans.--
       ``(1) In general.--Except as provided in paragraph (2), no 
     action may be brought under subsection (a)(1)(B), (a)(2), or 
     (a)(3) by a participant or beneficiary seeking relief based 
     on the application of any provision in section 101, subtitle 
     B, or subtitle D of title I of the Bipartisan Patient 
     Protection Act of 2001 (as incorporated under section 714).
       ``(2) Certain actions allowable.--An action may be brought 
     under subsection (a)(1)(B), (a)(2), or (a)(3) by a 
     participant or beneficiary seeking relief based on the 
     application of section 101, 113, 114, 115, 116, 117, 
     118(a)(3), 119, or 120 of the Bipartisan Patient Protection 
     Act of 2001 (as incorporated under section 714) to the 
     individual circumstances of that participant or beneficiary, 
     except that--
       ``(A) such an action may not be brought or maintained as a 
     class action; and
       ``(B) in such an action, relief may only provide for the 
     provision of (or payment of) benefits, items, or services 
     denied to the individual participant or beneficiary involved 
     (and for attorney's fees and the costs of the action, at the 
     discretion of the court) and shall not provide for any other 
     relief to the participant or beneficiary or for any relief to 
     any other person.
       ``(3) Other provisions unaffected.--Nothing in this 
     subsection shall be construed as affecting subsections 
     (a)(1)(C) and (n) or section 514(d).
       ``(4) Enforcement by secretary unaffected.--Nothing in this 
     subsection shall be construed as affecting any action brought 
     by the Secretary.''.

       TITLE IV--AMENDMENTS TO THE INTERNAL REVENUE CODE OF 1986

     SEC. 401. APPLICATION TO GROUP HEALTH PLANS UNDER THE 
                   INTERNAL REVENUE CODE OF 1986.

       Subchapter B of chapter 100 of the Internal Revenue Code of 
     1986 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 patients' bill of rights.'';

     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 
     title I of the Bipartisan Patient Protection Act of 2001 (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.''.

     SEC. 402. CONFORMING ENFORCEMENT FOR WOMEN'S HEALTH AND 
                   CANCER RIGHTS.

       Subchapter B of chapter 100 of the Internal Revenue Code of 
     1986, as amended by section 401, is further amended--
       (1) in the table of sections, by inserting after the item 
     relating to section 9813 the following new item:

``Sec. 9814. Standard relating to women's health and cancer rights.'';

     and
       (2) by inserting after section 9813 the following:

     ``SEC. 9814. STANDARD RELATING TO WOMEN'S HEALTH AND CANCER 
                   RIGHTS.

       ``The provisions of section 713 of the Employee Retirement 
     Income Security Act of 1974 (as in effect as of the date of 
     the enactment of this section) shall apply to group health 
     plans as if included in this subchapter.''.

        TITLE V--EFFECTIVE DATES; COORDINATION IN IMPLEMENTATION

     SEC. 501. EFFECTIVE DATES.

       (a) Group Health Coverage.--
       (1) In general.--Subject to paragraph (2) and subsection 
     (d), the amendments made by sections 201(a), 301, 303, and 
     401 and 402 (and title I 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 January 1, 
     2002 (in this section referred to as the ``general effective 
     date'').
       (2) Treatment of collective bargaining agreements.--In the 
     case of a group health

[[Page S1154]]

     plan maintained pursuant to one or more collective bargaining 
     agreements between employee representatives and one or more 
     employers ratified before the date of the enactment of this 
     Act, the amendments made by sections 201(a), 301, 303, and 
     401 and 402 (and title I insofar as it relates to such 
     sections) shall not apply to plan years beginning before the 
     later of--
       (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 the enactment of this Act); 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 division shall not be treated as a 
     termination of such collective bargaining agreement.
       (b) Individual Health Insurance Coverage.--Subject to 
     subsection (d), 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.
       (c) Treatment of Religious Nonmedical Providers.--
       (1) In general.--Nothing in this Act (or the amendments 
     made thereby) shall be construed to--
       (A) restrict or limit the right of group health plans, and 
     of health insurance issuers offering health insurance 
     coverage, to include as providers religious nonmedical 
     providers;
       (B) require such plans or issuers to--
       (i) utilize medically based eligibility standards or 
     criteria in deciding provider status of religious nonmedical 
     providers;
       (ii) use medical professionals or criteria to decide 
     patient access to religious nonmedical providers;
       (iii) utilize medical professionals or criteria in making 
     decisions in internal or external appeals regarding coverage 
     for care by religious nonmedical providers; or
       (iv) compel a participant or beneficiary to undergo a 
     medical examination or test as a condition of receiving 
     health insurance coverage for treatment by a religious 
     nonmedical provider; or
       (C) require such plans or issuers to exclude religious 
     nonmedical providers because they do not provide medical or 
     other required data, if such data is inconsistent with the 
     religious nonmedical treatment or nursing care provided by 
     the provider.
       (2) Religious nonmedical provider.--For purposes of this 
     subsection, the term ``religious nonmedical provider'' means 
     a provider who provides no medical care but who provides only 
     religious nonmedical treatment or religious nonmedical 
     nursing care.
       (d) Transition for Notice Requirement.--The disclosure of 
     information required under section 121 of this Act shall 
     first be provided pursuant to--
       (1) subsection (a) with respect to a group health plan that 
     is maintained as of the general effective date, not later 
     than 30 days before the beginning of the first plan year to 
     which title I applies in connection with the plan under such 
     subsection; or
       (2) subsection (b) with respect to a individual health 
     insurance coverage that is in effect as of the general 
     effective date, not later than 30 days before the first date 
     as of which title I applies to the coverage under such 
     subsection.

     SEC. 502. COORDINATION IN IMPLEMENTATION.

       The Secretary of Labor, the Secretary of Health and Human 
     Services, and the Secretary of the Treasury shall ensure, 
     through the execution of an interagency memorandum of 
     understanding among such Secretaries, that--
       (1) regulations, rulings, and interpretations issued by 
     such Secretaries relating to the same matter over which such 
     Secretaries have responsibility under the provisions of this 
     division (and the amendments made thereby) are administered 
     so as to have the same effect at all times; and
       (2) coordination of policies relating to enforcing the same 
     requirements through such Secretaries in order to have a 
     coordinated enforcement strategy that avoids duplication of 
     enforcement efforts and assigns priorities in enforcement.

     SEC. 503. SEVERABILITY.

       If any provision of this Act, an amendment made by this 
     Act, or the application of such provision or amendment to any 
     person or circumstance is held to be unconstitutional, the 
     remainder of this Act, the amendments made by this Act, and 
     the application of the provisions of such to any person or 
     circumstance shall not be affected thereby.
                                  ____


                                 S. 284

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Bipartisan Patient 
     Protection Act of 2001--Part II''.

     SEC. 2. EXPANDED AVAILABILITY OF ARCHER MSAS.

       (a) Extension of Program.--Paragraphs (2) and (3)(B) of 
     section 220(i) of the Internal Revenue Code of 1986 (defining 
     cut-off year) are each amended by striking ``2002'' each 
     place it appears and inserting ``2004''.
       (b) Increase In Number of Permitted Account Participants.--
       (1) In general.--Subsection (j) of section 220 of such Code 
     is amended by redesignating paragraphs (3), (4), and (5) as 
     paragraphs (4), (5), and (6) and by inserting after paragraph 
     (2) the following new paragraph:
       ``(3) Determination of whether limit exceeded for years 
     after 2001.--
       ``(A) In general.--The numerical limitation for any year 
     after 2001 is exceeded if the sum of--
       ``(i) the number of Archer MSA returns filed on or before 
     April 15 of such calendar year for taxable years ending with 
     or within the preceding calendar year, plus
       ``(ii) the Secretary's estimate (determined on the basis of 
     the returns described in clause (i)) of the number of Archer 
     MSA returns for such taxable years which will be filed after 
     such date, exceeds 1,000,000. For purposes of the preceding 
     sentence, the term `Archer MSA return' means any return on 
     which any exclusion is claimed under section 106(b) or any 
     deduction is claimed under this section.
       ``(B) Alternative computation of limitation.--The numerical 
     limitation for any year after 2001 is also exceeded if the 
     sum of--
       ``(i) 90 percent of the sum determined under subparagraph 
     (A) for such calendar year, plus
       ``(ii) the product of 2.5 and the number of medical savings 
     accounts established during the portion of such year 
     preceding July 1 (based on the reports required under 
     paragraph (5)) for taxable years beginning in such year,
     exceeds 1,000,000.''
       (2) Conforming amendments.--
       (A) Clause (ii) of section 220(j)(2)(B) of such Code is 
     amended by striking ``paragraph (4)'' and inserting 
     ``paragraph (5)''.
       (B) Subparagraph (A) of section 220(j)(4) of such Code is 
     amended by striking ``and 2001'' and inserting ``2001, 2002, 
     and 2003''.
       (c) Increase in Size of Eligible Employers.--Subparagraph 
     (A) of section 220(c)(4) of such Code is amended by striking 
     ``50 or fewer employees'' and inserting ``100 or fewer 
     employees''.
       (d) Effective Date.--The amendments made by this section 
     shall take effect on the date of the enactment of this Act.
       (e) GAO Study.--Not later than 1 year after the date of the 
     enactment of this Act, the Comptroller General of the United 
     States shall prepare and submit a report to the Committee on 
     Ways and Means of the House of Representatives and the 
     Committee on Finance of the Senate on the impact of Archer 
     MSAs on the cost of conventional insurance (especially in 
     those areas where there are higher numbers of such accounts) 
     and on adverse selection and health care costs.

     SEC. 3. DEDUCTION FOR 100 PERCENT OF HEALTH INSURANCE COSTS 
                   OF SELF-EMPLOYED INDIVIDUALS.

       (a) In General.--Paragraph (1) of section 162(l) of the 
     Internal Revenue Code of 1986 is amended to read as follows:
       ``(1) Allowance of deduction.--In the case of an individual 
     who is an employee within the meaning of section 401(c)(1), 
     there shall be allowed as a deduction under this section an 
     amount equal to 100 percent of the amount paid during the 
     taxable year for insurance which constitutes medical care for 
     the taxpayer and the taxpayer's spouse and dependents.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2001.

     SEC. 4. CREDIT FOR HEALTH INSURANCE EXPENSES OF SMALL 
                   BUSINESSES.

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

     ``SEC. 45E. SMALL BUSINESS HEALTH INSURANCE EXPENSES.

       ``(a) General Rule.--For purposes of section 38, in the 
     case of a small employer, the health insurance credit 
     determined under this section for the taxable year is an 
     amount equal to the applicable percentage of the expenses 
     paid by the taxpayer during the taxable year for health 
     insurance coverage for such year provided under a new health 
     plan for employees of such employer.
       ``(b) Applicable Percentage.--For purposes of subsection 
     (a), the applicable percentage is--
       ``(1) in the case of insurance purchased as a member of a 
     qualified health benefit purchasing coalition (as defined in 
     section 9841), 30 percent, and
       ``(2) in the case of insurance not described in paragraph 
     (1), 20 percent.
       ``(c) Limitations.--
       ``(1) Per employee dollar limitation.--The amount of 
     expenses taken into account under subsection (a) with respect 
     to any employee for any taxable year shall not exceed--
       ``(A) $2,000 in the case of self-only coverage, and
       ``(B) $5,000 in the case of family coverage.
     In the case of an employee who is covered by a new health 
     plan of the employer for only a portion of such taxable year, 
     the limitation under the preceding sentence shall be an 
     amount which bears the same ratio to such limitation 
     (determined without regard to this sentence) as such portion 
     bears to the entire taxable year.
       ``(2) Period of coverage.--Expenses may be taken into 
     account under subsection (a) only with respect to coverage 
     for the 4-year period beginning on the date the employer 
     establishes a new health plan.
       ``(d) Definitions.--For purposes of this section--
       ``(1) Health insurance coverage.--The term `health 
     insurance coverage' has the

[[Page S1155]]

     meaning given such term by section 9832(b)(1).
       ``(2) New health plan.--
       ``(A) In general.--The term `new health plan' means any 
     arrangement of the employer which provides health insurance 
     coverage to employees if--
       ``(i) such employer (and any predecessor employer) did not 
     establish or maintain such arrangement (or any similar 
     arrangement) at any time during the 2 taxable years ending 
     prior to the taxable year in which the credit under this 
     section is first allowed, and
       ``(ii) such arrangement provides health insurance coverage 
     to at least 70 percent of the qualified employees of such 
     employer.
       ``(B) Qualified employee.--
       ``(i) In general.--The term `qualified employee' means any 
     employee of an employer if the annual rate of such employee's 
     compensation (as defined in section 414(s)) exceeds $10,000.
       ``(ii) Treatment of certain employees.--The term `employee' 
     shall include a leased employee within the meaning of section 
     414(n).
       ``(3) Small employer.--The term `small employer' has the 
     meaning given to such term by section 4980D(d)(2); except 
     that only qualified employees shall be taken into account.
       ``(e) Special Rules.--
       ``(1) Certain rules made applicable.--For purposes of this 
     section, rules similar to the rules of section 52 shall 
     apply.
       ``(2) Amounts paid under salary reduction arrangements.--No 
     amount paid or incurred pursuant to a salary reduction 
     arrangement shall be taken into account under subsection (a).
       ``(f) Termination.--This section shall not apply to 
     expenses paid or incurred by an employer with respect to any 
     arrangement established on or after January 1, 2010.''.
       (b) Credit To Be Part of General Business Credit.--Section 
     38(b) of such Code (relating to current year business credit) 
     is amended by striking ``plus'' at the end of paragraph (12), 
     by striking the period at the end of paragraph (13) and 
     inserting ``, plus'', and by adding at the end the following:
       ``(14) in the case of a small employer (as defined in 
     section 45E(d)(3)), the health insurance credit determined 
     under section 45E(a).''
       (c) No Carrybacks.--Subsection (d) of section 39 of such 
     Code (relating to carryback and carryforward of unused 
     credits) is amended by adding at the end the following:
       ``(10) No carryback of section 45E credit before effective 
     date.--No portion of the unused business credit for any 
     taxable year which is attributable to the employee health 
     insurance expenses credit determined under section 45E may be 
     carried back to a taxable year ending before the date of the 
     enactment of section 45E.''
       (d) Denial of Double Benefit.--Section 280C of such Code is 
     amended by adding at the end the following new subsection:
       ``(d) Credit for Small Business Health Insurance 
     Expenses.--
       ``(1) In general.--No deduction shall be allowed for that 
     portion of the expenses (otherwise allowable as a deduction) 
     taken into account in determining the credit under section 
     45E for the taxable year which is equal to the amount of the 
     credit determined for such taxable year under section 45E(a).
       ``(2) Controlled groups.--Persons treated as a single 
     employer under subsection (a) or (b) of section 52 shall be 
     treated as 1 person for purposes of this section.''
       (e) Clerical Amendment.--The table of sections for subpart 
     D of part IV of subchapter A of chapter 1 of such Code is 
     amended by adding at the end the following:


``Sec. 45E. Small business health insurance expenses.''

       (f) Effective Date.--The amendments made by this section 
     shall apply to amounts paid or incurred in taxable years 
     beginning after December 31, 2001, for arrangements 
     established after the date of the enactment of this Act.

     SEC. 5. CERTAIN GRANTS BY PRIVATE FOUNDATIONS TO QUALIFIED 
                   HEALTH BENEFIT PURCHASING COALITIONS.

       (a) In General.--Section 4942 of the Internal Revenue Code 
     of 1986 (relating to taxes on failure to distribute income) 
     is amended by adding at the end the following:
       ``(k) Certain Qualified Health Benefit Purchasing Coalition 
     Distributions.--
       ``(1) In general.--For purposes of subsection (g), sections 
     170, 501, 507, 509, and 2522, and this chapter, a qualified 
     health benefit purchasing coalition distribution by a private 
     foundation shall be considered to be a distribution for a 
     charitable purpose.
       ``(2) Qualified health benefit purchasing coalition 
     distribution.--For purposes of paragraph (1)--
       ``(A) In general.--The term `qualified health benefit 
     purchasing coalition distribution' means any amount paid or 
     incurred by a private foundation to or on behalf of a 
     qualified health benefit purchasing coalition (as defined in 
     section 9841) for purposes of payment or reimbursement of 
     amounts paid or incurred in connection with the establishment 
     and maintenance of such coalition.
       ``(B) Exclusions.--Such term shall not include any amount 
     used by a qualified health benefit purchasing coalition (as 
     so defined)--
       ``(i) for the purchase of real property,
       ``(ii) as payment to, or for the benefit of, members (or 
     employees or affiliates of such members) of such coalition, 
     or
       ``(iii) for any expense paid or incurred more than 48 
     months after the date of establishment of such coalition.
       ``(3) Termination.--This subsection shall not apply--
       ``(A) to qualified health benefit purchasing coalition 
     distributions paid or incurred after December 31, 2009, and
       ``(B) with respect to start-up costs of a coalition which 
     are paid or incurred after December 31, 2010.''.
       (b) Qualified Health Benefit Purchasing Coalition.--
       (1) In general.--Chapter 100 of such Code (relating to 
     group health plan requirements) is amended by adding at the 
     end the following new subchapter:

     ``Subchapter D--Qualified Health Benefit Purchasing Coalition

``Sec.  9841.  Qualified health benefit purchasing coalition.

     ``SEC. 9841. QUALIFIED HEALTH BENEFIT PURCHASING COALITION.

       ``(a) In General.--A qualified health benefit purchasing 
     coalition is a private not-for-profit corporation which--
       ``(1) sells health insurance through State licensed health 
     insurance issuers in the State in which the employers to 
     which such coalition is providing insurance are located, and
       ``(2) establishes to the Secretary, under State 
     certification procedures or other procedures as the Secretary 
     may provide by regulation, that such coalition meets the 
     requirements of this section.
       ``(b) Board of Directors.--
       ``(1) In general.--Each purchasing coalition under this 
     section shall be governed by a Board of Directors.
       ``(2) Election.--The Secretary shall establish procedures 
     governing election of such Board.
       ``(3) Membership.--The Board of Directors shall--
       ``(A) be composed of representatives of the members of the 
     coalition, in equal number, including small employers and 
     employee representatives of such employers, but
       ``(B) not include other interested parties, such as service 
     providers, health insurers, or insurance agents or brokers 
     which may have a conflict of interest with the purposes of 
     the coalition.
       ``(c) Membership of Coalition.--
       ``(1) In general.--A purchasing coalition shall accept all 
     small employers residing within the area served by the 
     coalition as members if such employers request such 
     membership.
       ``(2) Other members.--The coalition, at the discretion of 
     its Board of Directors, may be open to individuals and large 
     employers.   
       ``(3) Voting.--Members of a purchasing coalition shall have 
     voting rights consistent with the rules established by the 
     State.
       ``(d) Duties of Purchasing Coalitions.--Each purchasing 
     coalition shall--
       ``(1) enter into agreements with small employers (and, at 
     the discretion of its Board, with individuals and other 
     employers) to provide health insurance benefits to employees 
     and retirees of such employers,
       ``(2) where feasible, enter into agreements with 3 or more 
     unaffiliated, qualified licensed health plans, to offer 
     benefits to members,
       ``(3) offer to members at least 1 open enrollment period of 
     at least 30 days per calendar year,
       ``(4) serve a significant geographical area and market to 
     all eligible members in that area, and
       ``(5) carry out other functions provided for under this 
     section.
       ``(e) Limitation on Activities.--A purchasing coalition 
     shall not--
       ``(1) perform any activity (including certification or 
     enforcement) relating to compliance or licensing of health 
     plans,
       ``(2) assume insurance or financial risk in relation to any 
     health plan, or
       ``(3) perform other activities identified by the State as 
     being inconsistent with the performance of its duties under 
     this section.
       ``(f) Additional Requirements For Purchasing Coalitions.--
     As provided by the Secretary in regulations, a purchasing 
     coalition shall be subject to requirements similar to the 
     requirements of a group health plan under this chapter.
       ``(g) Relation to Other Laws.--
       ``(1) Preemption of state fictitious group laws.--
     Requirements (commonly referred to as fictitious group laws) 
     relating to grouping and similar requirements for health 
     insurance coverage are preempted to the extent such 
     requirements impede the establishment and operation of 
     qualified health benefit purchasing coalitions.
       ``(2) Allowing savings to be passed through.--Any State law 
     that prohibits health insurance issuers from reducing 
     premiums on health insurance coverage sold through a 
     qualified health benefit purchasing coalition to reflect 
     administrative savings is preempted. This paragraph shall not 
     be construed to preempt State laws that impose restrictions 
     on premiums based on health status, claims history, industry, 
     age, gender, or other underwriting factors.
       ``(3) No waiver of hipaa requirements.--Nothing in this 
     section shall be construed to change the obligation of health 
     insurance issuers to comply with the requirements of title 
     XXVII of the Public Health Service Act with respect to health 
     insurance coverage offered to small employers in the small 
     group market through a qualified health benefit purchasing 
     coalition.
       ``(h) Definition of Small Employer.--For purposes of this 
     section--

[[Page S1156]]

       ``(1) In general.--The term `small employer' means, with 
     respect to any calendar year, any employer if such employer 
     employed an average of at least 2 and not more than 50 
     qualified employees on business days during either of the 2 
     preceding calendar years. For purposes of the preceding 
     sentence, a preceding calendar year may be taken into account 
     only if the employer was in existence throughout such year.
       ``(2) Employers not in existence in preceding year.--In the 
     case of an employer which was not in existence throughout the 
     1st preceding calendar year, the determination under 
     paragraph (1) shall be based on the average number of 
     qualified employees that it is reasonably expected such 
     employer will employ on business days in the current calendar 
     year.''.
       (2) Conforming amendment.--The table of subchapters for 
     chapter 100 of such Code is amended by adding at the end the 
     following item:

``Subchapter D.  Qualified health benefit purchasing coalition.''.

       (c) Effective Date.--The amendment made by subsection (a) 
     shall apply to taxable years beginning after December 31, 
     2001.

     SEC. 6. STATE GRANT PROGRAM FOR MARKET INNOVATION.

       (a) In General.--The Secretary of Health and Human Services 
     (in this section referred to as the ``Secretary'') shall 
     establish a program (in this section referred to as the 
     ``program'') to award demonstration grants under this section 
     to States to allow States to demonstrate the effectiveness of 
     innovative ways to increase access to health insurance 
     through market reforms and other innovative means. Such 
     innovative means may include (and are not limited to) any of 
     the following:
       (1) Alternative group purchasing or pooling arrangements, 
     such as a purchasing cooperatives for small businesses, 
     reinsurance pools, or high risk pools.
       (2) Individual or small group market reforms.
       (3) Consumer education and outreach.
       (4) Subsidies to individuals, employers, or both, in 
     obtaining health insurance.
       (b) Scope; Duration.--The program shall be limited to not 
     more than 10 States and to a total period of 5 years, 
     beginning on the date the first demonstration grant is made.
       (c) Conditions for Demonstration Grants.--
       (1) In general.--The Secretary may not provide for a 
     demonstration grant to a State under the program unless the 
     Secretary finds that under the proposed demonstration grant--
       (A) the State will provide for demonstrated increase of 
     access for some portion of the existing uninsured population 
     through a market innovation (other than merely through a 
     financial expansion of a program initiated before the date of 
     the enactment of this Act);
       (B) the State will comply with applicable Federal laws;
       (C) the State will not discriminate among participants on 
     the basis of any health status-related factor (as defined in 
     section 2791(d)(9) of the Public Health Service Act), except 
     to the extent a State wishes to focus on populations that 
     otherwise would not obtain health insurance because of such 
     factors; and
       (D) the State will provide for such evaluation, in 
     coordination with the evaluation required under subsection 
     (d), as the Secretary may specify.
       (2) Application.--The Secretary shall not provide a 
     demonstration grant under the program to a State unless--
       (A) the State submits to the Secretary such an application, 
     in such a form and manner, as the Secretary specifies;
       (B) the application includes information regarding how the 
     demonstration grant will address issues such as governance, 
     targeted population, expected cost, and the continuation 
     after the completion of the demonstration grant period; and
       (B) the Secretary determines that the demonstration grant 
     will be used consistent with this section.
       (3) Focus.--A demonstration grant proposal under section 
     need not cover all uninsured individuals in a State or all 
     health care benefits with respect to such individuals.
       (d) Evaluation.--The Secretary shall enter into a contract 
     with an appropriate entity outside the Department of Health 
     and Human Services to conduct an overall evaluation of the 
     program at the end of the program period. Such evaluation 
     shall include an analysis of improvements in access, costs, 
     quality of care, or choice of coverage, under different 
     demonstration grants.
       (e) Option to Provide for Initial Planning Grants.--
     Notwithstanding the previous provisions of this section, 
     under the program the Secretary may provide for a portion of 
     the amounts appropriated under subsection (f) (not to exceed 
     $5,000,000) to be made available to any State for initial 
     planning grants to permit States to develop demonstration 
     grant proposals under the previous provisions of this 
     section.
       (f) Authorization of Appropriations.--There are authorized 
     to be appropriated $100,000,000 for each fiscal year to carry 
     out this section. Amounts appropriated under this subsection 
     shall remain available until expended.
       (g) State Defined.--For purposes of this section, the term 
     ``State'' has the meaning given such term for purposes of 
     title XIX of the Social Security Act.

  Mr. KENNEDY. Mr. President, I'm honored to join my colleagues in 
introducing the Bipartisan Patient Protection Act. This bill is a true 
bipartisan compromise, and I am confident it will receive the support 
of the majority of the Senate.
  We believe that our proposal is just what the doctor ordered to end 
abuses by HMOs and managed care health plans. Doctors and patients 
should be making medical decisions, not insurance company accountants. 
It is long past time for Congress to start protecting patients, instead 
of HMO profits.
  Prompt passage of this legislation is vital for the 161 million 
Americans with private health insurance coverage. This is the fifth 
year that Congress has considered patient protection--and too many 
patients have been subject to unacceptable abuses as the result of our 
inaction. Every day that Congress fails to act, more patients suffer.
  A survey by the School of Public Health at the University of 
California found that every day--each and every day--50,000 patients 
experience added pain and suffering because of actions by their health 
plan. Thirty-five thousand patients have needed care delayed--or denied 
all together. Thirty-five thousand other patients have a referral to a 
specialist delayed or denied. Thirty-one thousand patients are forced 
to change their doctors. Eighteen thousand patients are forced to 
change their medications.
  A survey of physicians by the Kaiser Family Foundation and the 
Harvard School of Public Health found similar results. Every day, tens 
of thousands of patients across the country suffer serious declines in 
their health as the result of the action--or inaction--of their health 
plan.
  Whether the issue is diagnostic tests, specialty care, emergency 
care, access to clinical trials, availability of needed drugs, 
protection of doctors who give patients their best possible advice, or 
women's ability to obtain gynecological services--too often, in all of 
these cases. HMOs and managed care plans treat the company's bottom 
line as more important than the patient's vital signs. These abuses 
have no place in American medicine. Every doctor knows it. Every 
patient knows it. And in their hearts, every member of Congress knows 
it.
  Every American also knows that it is wrong for the current legal 
system to give immunity to health insurance companies and HMOs that 
kill or injure patients. No other industry in America has immunity from 
liability when it acts irresponsibly, and HMOs and health insurance 
companies shouldn't have it either.
  The legislation we are offering today is bipartisan. Whether the 
issue is liability, the appeals process, or state flexibility, we have 
made significant modifications to respond to legitimate concerns. but 
we have preserved the basic principle that when serious illness 
strikes, every American deserves the protection they were promised.
  President Bush campaigned on a pledge to pass an effective patients' 
bill of rights. We are ready to work with him to bring the American 
people the protection they deserve. Ending the current abuses should be 
a priority for the new Congress and the new Administration, and I am 
hopeful that we can work together to past this legislation as soon as 
possible this year.

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