[Congressional Record Volume 147, Number 111 (Thursday, August 2, 2001)]
[House]
[Pages H5213-H5315]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

[[Page H5213]]

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                        House of Representatives

                              {time}  1715
                   BIPARTISAN PATIENT PROTECTION ACT

                              (Continued)

  Who are jurors? Jurors are our neighbors, our voters. They are the 
American people. Trust them. When it comes to understanding what it 
costs to be deprived of a full and healthy life, jurors know what it 
means. They have more wisdom than lawyers, than doctors, and I dare say 
than Members of Congress.
  Mr. STARK. Mr. Chairman, I yield 30 seconds to the gentleman from 
Maryland (Mr. Cardin).
  Mr. CARDIN. Mr. Chairman, I was listening to my colleagues on the 
other side of the aisle talk about what this bill does. The Ganske-
Dingell bill provides real patient protection, whether it is access to 
emergency care, specialists, whether it is primary care.
  The Norwood amendment takes away those rights because there is no 
enforcement. There is no reason why HMOs will provide these particular 
protections. It is the opponents of the Ganske-Dingell bill that are 
telling Members that this Norwood amendment will perfect it.
  What it does is take away the protections in the underlying bill. We 
should reject the Norwood amendment.
  Mr. STARK. Mr. Chairman, I yield 45 seconds to the gentleman from 
Wisconsin (Mr. Kind).
  (Mr. KIND asked and was given permission to revise and extend his 
remarks.)
  Mr. KIND. Mr. Chairman, the debate today is not about the 
technicalities of a complicated piece of legislation: who has the 
rebuttal presumption, what the standard of care should be, whether 
patients are going to be suing in Federal court for this issue or State 
court for that.
  This issue boils down to one simple proposition. If someone is in the 
business of making medical decisions that affect the health, welfare 
and lives of patients, that individual should be held to the same 
standard of responsibility as anyone else involved in that process, 
period. No exceptions. No carve-outs. No special treatments based on 
political contributions made in this place. That is what is at stake at 
the end of today's debate.
  Mr. Chairman, I urge my colleagues to reject the Norwood special 
treatment amendment and instead pass a fair Patients' Bill of Rights.
  Mr. STARK. Mr. Chairman, I yield 30 seconds to the gentleman from 
Iowa (Mr. Ganske).
  Mr. GANSKE. Mr. Chairman, here is what two law professors from New 
Jersey say:
  ``In preempting State law, the Norwood amendment goes beyond conduct 
that involves negligent medical judgment to a particular patient's 
case. The amendment may, by virtue of the words `based on,' stipulate 
that State malpractice law does not apply to any treatment decision 
made by a managed care organization, whether it be negligent, reckless, 
willful or wanton.
  ``For example, no State cause of action can be maintained against a 
designated decision-maker for his decision to discharge a patient early 
from a hospital even if the likely result of that discharge would be 
the patient's death. In short, all forms of vicarious liability under 
State law would be preempted under the Norwood amendment.''
  Mr. STARK. Mr. Chairman, I yield myself the balance of my time.
  Mr. Chairman, I will conclude by saying that we are in a sad state of 
affairs when we have dentists writing law and lawyers practicing 
medicine, and Congressmen trying to run HMOs. I have a list of 704 
organizations that support the original Ganske-Dingell bill without the 
poison pill amendments.
  There is not a health care professional organization in this country 
that does not support this bill, and the dental organization of the 
gentleman from Georgia (Mr. Norwood) supports the original bill. Why 
should we vote against those people that give us medical care? Do we 
know better? Is there somebody in this audience who would tell me of 
any medical profession that does not support the original bill and 
oppose the Norwood amendment?
  If we are going to legislate to protect patients, let us make sure 
that we do it right and support the original Ganske-Dingell bill.
  Mr. BOEHNER. Mr. Chairman, I yield myself such time as I may consume.
  Mr. Chairman, the Ganske-Dingell bill would subject employers and 
unions, including many small businesses that voluntarily provide health 
benefits to their employees, to new lawsuits with unlimited damages and 
no protection from frivolous lawsuits.
  I think it is pretty clear that Americans want a Patients' Bill of 
Rights. I think they have made it very clear, as well, that they do not 
want unlimited lawsuits. Expanding liability for small employers and 
unions who voluntarily offer health plans is wrong-headed and 
dangerous, and in my view, will cause millions of Americans to lose 
their coverage.
  Mr. Chairman, all of us who serve in this body come from different 
walks of life. We have doctors that serve in the House. They happen to 
be split on both sides of this particular issue. We have our share of 
lawyers that occupy this body as our colleagues, and we have lawyers on 
both sides of this particular issue.
  In my own case, I come to the halls of Congress as a small business 
person, someone who has in fact hired people, someone who has had to 
run a business, and someone who offered a health plan to my employees. 
I can tell my colleagues, as I have said year after year, debate after 
debate on this particular subject that if the underlying bill were

[[Page H5214]]

to pass as is and to become law, immediately I, as an employer, would 
eliminate the health benefits for my employees. Why? Because I would be 
subject to more increased litigation.
  Every employer in America, and most of their employees as well, 
understand all of the litigation that is occurring in this country is 
causing prices to go up, and in many cases, causing businesses to go 
out of business.
  One little lawsuit under that underlying bill that would be allowed 
could put under many, many small employers. Today, when new employers 
are the lifeblood of our economy, why would we want to increase the 
liability that we put on them?
  Mr. Chairman, I think that we need to find a balanced approach, and I 
think the President, working with the gentleman from Georgia (Mr. 
Norwood), deserves an enormous amount of credit from all of us. The 
President put his prestige out on the line. He worked hard to come to 
some compromise that he would be willing to sign into law.
  I am a little surprised at my colleagues across the aisle who have 
rejected the hand of the President over the last 6 months, and then 
today continue to reject the idea of trying to find some common ground 
and moving ahead.
  What do they want to do? Do what we have done for the last 6 years, 
and we are going to get the same result. Nothing. I think the President 
deserves an awful lot of credit for ending the legislative gridlock on 
this issue. What do we have to fear? Nothing, because we are going to 
go to conference with the Senate which has a different bill. We have an 
opportunity to try to resolve the differences between the two bodies. 
That is the nature of our institution.
  What we ought to do today is get behind the compromise bill that is 
going to be before us, support the Norwood amendment, support the bill 
on final passage, and let us work out our differences with the Senate. 
As we do, not only will Congress be winners, but more importantly, the 
American people will be great winners because they will have better 
access to health care, more patient protections; and regardless of 
which version of liability becomes law, they will have greater remedies 
in the law than they have today.
  Even the amendment of the gentleman from Georgia (Mr. Norwood), which 
is being criticized here as being inadequate, goes far beyond what we 
have in law today. If Members want to help patients, why not accept his 
amendment? Give patients additional remedies and help them get the kind 
of quality health care that the American people want.
  Ms. SOLIS. Mr. Chairman, this body has a chance to enact a real 
patient's bill of rights to protect people from the harmful decisions 
made by their health insurance plans.
  All of us have heard from constituents who are fed up at being told 
by their health plans that they can't have access to the health care 
they need even through they pay their insurance premiums for this care 
in the first place!
  So you would think all of us could agree that it's time to do 
something.
  Instead, my Republican colleagues want to pass a bill that does 
nothing.
  In fact, the bill supported by President Bush would roll back 
important patient protections already in place in my home state of 
California.
  In California, we enacted a law that says to consumers--if your 
health plan interferes with the quality of the medical care you 
receive, you have a legal right to stop them through the courts.
  If you are injured because your health insurance company delays or 
refuses you health care--you have a legal right to sue them through the 
courts.
  It's just that simple.
  But President Bush wants to take away my constituents' right to have 
protection from the bad decisions of their health insurance companies.
  And he wants to call that managed care reform, I call it an HMO 
Protection Bill.
  Well that's not right.
  I urge my colleagues to reject any attempt to weaken the patient's 
bill of rights and to support real reform of health insurance 
companies.
  Mrs. McCARTHY of New York. Mr. Chairman, the last 24-hours of 
gameplaying with people's lives by the leadership has left a huge mark 
on the House of Representatives. I don't think our forefathers would be 
proud of the political games that have been played up here.
  Let's look at the score of the game. This week, special interest 
groups have two wins, and the American people have zero.
  Yesterday, with the Energy Bill, oil companies won.
  Today, with the so-called Patient's Bill of Rights, insurance 
companies will win.
  Under the House leadership deal on the so-called Patient's Bill of 
Rights, many of our constituents are going to have their health care 
needs compromised.
  However, there are a few good things about the bill. Language that 
I've been working on to protect health care workers is included. I 
spent 30 years as a nurse, and I speak from experience.
  When a health care worker blows the whistle on workplace abuses, they 
shouldn't have to fear retaliation,
  For example, a nurse might be tempted to remain silent when they see 
a patient's quality of care being compromised.
  Nurses should feel 100 percent confident that they can come forward 
without facing retaliation from their employer. No one should feel that 
their job is in jeopardy because they speak up for patient safety.
  Also, my language ensuring hospitals get paid on time by HMOs is 
included.
  Not only have HMOs been neglecting patient care, but they are also 
well-practiced in their denial and delay of payments to hospitals, 
medical group practices, doctors and other health care professionals.
  Health care providers shouldn't be stuck in the middle for a bitter 
struggle between quality patient care and insurance company 
regulations.
  But despite these good provisions, it's clear that special interests 
are the real winners in this deal.
  How many more examples of special interest control must this esteemed 
body suffer through before doing something to change it?
  I'm sure of one thing--we need campaign finance reform to get the 
special interests out of Congress.
  Oppose the Norwood amendment.
  Support the Ganske-Dingell bill. It puts patients' interests before 
special interests.
  Ms. KILPATRICK. Mr. Chairman, I rise today to speak in favor of 
Representative Ganske's Bipartisan Patients' Bill of Rights and to 
oppose the amendment substitute being offered. When we started this 
debate several years ago, we were trying to find a way to protect 
patients and help them to receive access to quality health care. 
Somehow we have strayed from our original purpose and have started 
trying to protect HMO's. There is something wrong with this picture.
  The people of this country want security in knowing that the health 
care they receive is based on sound practice, not on an employer's or 
health care plan's bottom line. The people of this country deserve to 
have this assurance. I question whether or not those who oppose the 
Ganske bill would want for their families to face what so many of our 
constituents face everyday--uphill battles against HMO's in an attempt 
to receive the treatment their doctor has prescribed for them.
  Several of my colleagues plan to offer amendments to the Ganske bill 
that will remove the very essence of the Patients' Bill of Rights. The 
amendments they plan to propose are being touted as ones that will make 
this a true compromise bill. It is not compromise in my eyes. If these 
amendments pass, the name of the bill will remain the same, but the 
substance of the bill will be worthless.
  There are three ``poison pill amendments.'' The amendments being 
offered on the floor today will cost the American people millions of 
dollars. The underlying bill, as introduced by Representative Ganske, 
includes ways to pay for the costs of this bill. The alternative plan 
does not pay for these costs. We are talking about costs that total 
over $20 million. Where is this money going to come from? Shall we just 
continue drawing down on the Medicare and Social Security Trust Funds?
  The amendments being offered to this bill will also supersede the 
rights of the states. Thirty nine states, including Michigan, already 
have their own tort laws that work and work well. Under the alternative 
being offered, federal law will prevail. It will even preempt state 
remedies previously provided by the Supreme Court. In states that have 
no damage caps, they would be forced to accept the damage limitations 
provided by the alternative.
  Under Representative Ganske's bill, individuals have the right to 
have their case reviewed by an external review board. This makes sense. 
However, the alternative plan makes it almost impossible for a patient 
to prove his or her case in court. A patient must demonstrate the 
decision of the external review entity was completely unreasonable. It 
would not matter if the external reviewers were not familiar with the 
latest medical evidence, or if the reviewers did not consider all the 
facts of the patient's case. This review process is a medical one. It 
is vital that a patient have access to this review process, but it does 
not provide the due process protections that a court does. Patients 
should have access to the courts. To do otherwise is just

[[Page H5215]]

one more attempt to protect HMO's and insurers at the expense of 
patients.
  I ask my colleagues to carefully consider the amendments and the 
final bill that we are being asked to vote on today. Vote against the 
``poison pill amendments'' and support a true Patients' Bill of Rights. 
Make HMO's accountable for their actions, just as we hold doctors and 
hospitals accountable. Vote yes for Representative Ganske's bill, a 
bill that will protect patients, not HMO's and the insurance industry.
  Ms. BERKLEY. Mr. Chairman, I rise today in support of H.R. 2563, the 
Bipartisan Patient Protection Act.
  This bill is important because it provides direct access to necessary 
medical care without administrative barriers for our nation's citizens. 
It allows doctors, not bureaucrats to make medical decisions.
  The time has come in America to give doctors the right to make 
decisions about what kind of treatments their patients receive, how 
long they stay in the hospital, what type of care is given.
  This bill will provide our constituents with the kind of medical care 
they need, when they need it and they won't have to jump through hoops 
to get it.
  This legislation is long overdue. Let's do the right thing and pass 
this bill.
  Mrs. MINK of Hawaii. Mr. Chairman, I rise today deeply disappointed 
in the total sellout of a meaningful patients' bill of rights.
  For years, a bipartisan coalition of lawmakers have been working 
together to reform the managed care industry and develop a genuine 
patients' bill of rights.
  A growing number of Americans get their health insurance through 
managed care plans. Although these plans enable many employers to 
provide affordable, high quality health benefits, various groups and 
individuals have expressed frustration with HMO's denial of necessary 
services and lack of an appeals process. A strong patients' bill of 
rights puts medical decision making back into the hands of doctors and 
patients and holds managed care plans accountable for failure to allow 
needed health care.
  Today we are confronted by a compromise reached between 
Representative Norwood and the President, which no longer protects 
patients' health care rights.
  A patients' bill of rights must allow a patient to sue their health 
plan for any injuries they receive if they were denied proper medical 
care. Of course, the lawsuit could only occur after an independent 
medical reviewer considers the patient's medical condition along with 
the most up-to-date medical knowledge and apply it to the individual's 
specific case.
  A patients' bill of rights must close the loophole that allows HMOs 
to be the only industry that is protected from lawsuits.
  But the agreement reached between President Bush and Representative 
Norwood does neither of these things.
  Their agreement changes the external review process to prohibit the 
independent medical reviewer from modifying the health plans' decision. 
The reviewer will not even have access to the information they need in 
order to make a proper decision. The amendment also wipes away any 
current state laws relating to corporate liability of HMOs when they 
are acting as health care providers. This amendment preempts laws that 
states have passed in regards to patient protections. On the surface, 
the Norwood amendment allows consumers to sue in state court. But upon 
further examination, one realizes that consumers will never see state 
court. All cases will be brought to federal court because the amendment 
states that an action against an HMO may not be removed from federal 
court; only the action against an employer can be removed from federal 
court. Their amendment also sets unreasonably low caps on damages.

  The Norwood amendment rips apart an otherwise good bill. The real 
Ganske-Norwood-Dingell-Berry bill would allow all insured Americans the 
option of seeing the doctor of their choice. This means women would 
have direct access to obstetric and gynecological care. Women 
desperately need ob-gyn care without first having to receive a referral 
and/or prior authorization.
  The bipartisan Ganske-Dingell-Norwood bill would protect women who 
have mastectomies and lymph node dissections. After undergoing these 
procedures, women would be able to consult with their doctor on how 
long they need to stay in the hospital without the fear that their 
health plan will not cover their entire hospital stay.
  The bill would also provide access to: emergency room care, without 
prior authorizations; guaranteed access to health care specialists; 
access to pediatric specialists; and access to approved FDA clinical 
trials for patients with life-threatening or serious illnesses.
  But the liability provisions agreed to by the President and 
Representative Norwood overshadow all of these things. I simply cannot 
support a patients' bill of right that does not give individuals the 
full right to sue HMOs. The only way to hold HMOs fully accountable is 
to allow consumers a right of redress.
  A bill of rights is an empty promise if it lacks the procedure 
necessary to enforce it.
  This has become a bill of rights for HMO's!
  This ``Compromise'' bill is a bitter retreat and forces me to vote 
No.
  Ms. BALDWIN. Mr. Chairman, families in Wisconsin are anxious about 
the state of their health care. Too often, profit takes priority over 
patient need. Patients are losing faith that they can count on their 
health insurance plans to provide the care that they were promised when 
they enrolled and paid their premiums.
  As Members of Congress, we have all tried to help our constituents 
who were denied care by HMOs. We have all heard their heartbreaking 
stories. Just this morning, I heard from a constituent of mine whose 
12-year-old daughter, Francesca, has Cerebal Palsy. His daughter 
requires surgery to halt deterioration of her walking abilities so that 
she will not have to be dependent upon a wheelchair.
  This father asked his HMO to allow his daughter to have surgery at a 
particular hospital that is not a provider in their plan because the 
hospital that is a provider in their plan no longer employs a 
specialist in this type of treatment. Instead of giving this father a 
referral, the HMO recommended that he switch plans. No one should fear 
that their insurance company would abandon them when they need it most.
  I urge my colleagues to support the Ganske-Dingell bill and oppose 
these three amendments that will serve to deprive Americans of the 
patient protections they deserve.
  Make no mistake about it, if these amendments pass, the bill should 
be renamed the HMO Bill of Rights.
  Mr. UDALL of New Mexico. Mr. Chairman. The overwhelming majority of 
Americans view patients' rights legislation as a priority and strongly 
support meaningful patient protection legislation. This issue has been 
debated for many years now and the time for Congress to act is long 
overdue.
  Today, however, we have the opportunity to make up for lost time and 
provide sound, responsible managed care reforms and meaningful 
protections for patients and their doctors. We can do this by passing 
the Ganske-Dingell Patients Protection bill.
  This legislation ensures that physicians, not HMO bureaucrats, are 
making the medical decisions that affect patient's lives. This 
legislation provides for strong and effective internal and independent 
external review of claim denials. This legislation allows patients to 
hold their insurance companies and HMO's accountable for harm as a 
result of bureaucratic negligence, malfeasance, or incompetence.
  This legislation, Mr. Chairman, has my strong support for all of 
these reasons that I just mentioned.
  However, should this House pass the Norwood amendment or any of the 
other amendments later today, this legislation will be turned from the 
Patients Protection Act to the HMO Protection Act and will lose my 
support.
  The Norwood Amendment carves out special protection for HMO's, rolls 
back patient protections and tramples states rights. I cannot support 
such an amendment, nor any bill that contains such an amendment.
  The time for a meaningful patient's protection act is long overdue. 
Let's not waste the opportunity we have today by passing a bill that 
protects HMO's instead of patients. I urge my colleagues to support 
H.R. 2563, and oppose any amendments that would weaken critically 
important patient protections. The time for meaningful patient 
protection is now. Vote ``yes'' on H.R. 2563 and against weakening 
amendments.
  Mr. PAUL. Mr. Chairman, I appreciate the opportunity to explain why I 
oppose all versions of the Patients' Bill of Rights. Once again 
Congress is staging a phony debate over which form of statism to 
embrace, instead of asking the fundamental question over whether 
Congress should be interfering in this area at all, much less examine 
how previous interferences in the health care market created the 
problems which these proposals claim to address.
  The proper way to examine health care issues is to apply the same 
economic and constitutional principles that one would apply to every 
other issue. As an M.D., I know that when I advise on medical 
legislation that I may be tempted to allow my emotional experience as a 
physician to influence my views. But, nevertheless, I am acting in the 
role as legislator and politician.
  The M.D. degree grants no wisdom as to the correct solution to our 
managed-care mess. The most efficient manner to deliver medical 
services, as it is with all goods and services, is through the free 
market. Economic principles determine efficiencies of markets, even the 
health care market, not our emotional experiences dealing with managed 
care.
  The fundamental economic principle is that true competition assures 
that the consumer gets the best deal at the best price possible by 
putting pressure on the providers. This principle applies equally to 
health care as it

[[Page H5216]]

does to other goods and services. However, over the past fifty years, 
Congress has systematically destroyed the market in health care. HMOs 
themselves are the result of conscious government policy aimed at 
correcting distortions in the health care market caused by Congress. 
The story behind the creation of the HMOs is a classic illustration of 
how the unintended consequences of government policies provide a 
justification for further expansions of government power. During the 
early seventies, Congress embraced HMOs in order to address concerns 
about rapidly escalating health care costs.
  However, it was previous Congressional action which caused health 
care costs to spiral by removing control over the health care dollar 
from consumers and thus eliminating any incentive for consumers to pay 
attention to prices when selecting health care. Because the consumer 
had the incentive to monitor health care prices stripped away and 
because politicians were unwilling to either give up power by giving 
individuals control over their health care or take responsibility for 
rationing care, a third way to control costs had to be created. Thus, 
the Nixon Administration, working with advocates of nationalized 
medicine, crafted legislation providing federal subsidies to HMOs and 
preempting state laws forbidding physicians to sign contracts to deny 
care to their patients. This legislation also mandated that health 
plans offer an HMO option in addition to traditional fee-for-service 
coverage. Federal subsidies, preemption of state law, and mandates on 
private business hardly sound like the workings of the free market. 
Instead, HMOs are the result of the same Nixon-era corporatist, big 
government mindset that produced wage-and-price controls.
  I am sure many of my colleagues will think it ironic that many of the 
supporters of Nixon's plan to foist HMOs on the American public are 
today among the biggest supporters of the ``patients' rights'' 
legislation. However, this is not really surprising because both the 
legislation creating HMOs and the Patients' Bill of Rights reflect the 
belief that individuals are incapable of providing for their own health 
care needs and therefore government must control health care. The only 
real difference between our system of medicine and the Canadian 
``single payer'' system is that in America, Congress contracted out the 
job of rationing health care resources to the HMOs.

  No one can take a back seat to me regarding the disdain I hold for 
the HMO's role in managed care. This entire unnecessary level of 
corporatism that rakes off profits and undermines care is a creature of 
government interference in health care. These non-market institutions 
and government could have only gained control over medical care through 
a collusion of organized medicine, politicians, and the HMO profiteers 
in an effort to provide universal health care. No one suggests that we 
should have universal food, housing, TV, computer and automobile 
programs; and yet, many of the poor to much better getting these 
services through the marketplace as prices are driven down through 
competition.
  We all should become suspicious when it is declared we need a new 
Bill of Rights, such as a Taxpayers' Bill of Rights, or now a Patients' 
Bill of Rights. Why do more Members not ask why the original Bill of 
Rights is not adequate in protecting all rights and enabling the market 
to provide all services? In fact, if Congress respected the 
Constitution we would not even be debating this bill, and we would have 
never passed any of the special-interest legislation that created and 
empowered the HMOs in the first place!
  Mr. Chairman, the legislation before us is flawed not only in its 
effect but in the very premise that individuals have a federally-
enforceable ``right'' to health care. Mixing the concept of rights with 
the delivery of services is dangerous. The whole notion that patient's 
``rights'' can be enhanced by more edicts by the federal government is 
preposterous.
  Disregard for constitutional limitations on government, ignorance of 
the basic principles of economics combined with the power of special 
interests influencing government policy has brought us this managed-
care monster. If we pursue a course of more government management in an 
effort to balance things, we are destined to make the system much 
worse. If government mismanagement in an area that the government 
should not be managing at all is the problem, another level of 
bureaucracy, no matter how well intended, will not be helpful. The law 
of unintended consequences will prevail and the principle of government 
control over providing a service will be further entrenched in the 
Nation's psyche. The choice in actually is government-provided medical 
care and its inevitable mismanagement or medical care provided by a 
market economy.
  Many members of Congress have convinced themselves that they can 
support a ``watered-down'' Patients' Bill of Rights which will allow 
them to appease the supporters of nationalized medicine without 
creating the negative consequences of the unmodified Patients' Bill of 
Rights, while even some supporters of the most extreme versions of this 
legislation say they will oppose any further steps to increase the 
power of government over health care. These well-intentioned members 
ignore the economic fact that partial government involvement is not 
possible. It inevitably leads to total government control. A vote for 
any version of a Patients' Bill of Rights is a 100 percent endorsement 
of the principle of government management of the health care system.

  Those who doubt they are endorsing government control of medicine by 
voting for a modified Patients' Bill of Rights should consider that 
even after this legislation is ``watered-down'' it will still give the 
federal government the power to control the procedures for resolving 
disputes for every health plan in the country, as well as mandating a 
laundry list of services that health plans must offer to their 
patients. The new and improved Patients' Bill of Rights will still 
drive up the costs of health care, causing many to lose their insurance 
and lead to yet more cries for government control of health care to 
address the unintended consequences of this legislation.
  Of course, the real power over health care will lie with the 
unelected bureaucrats who will implement and interpret these broad and 
vague mandates. Federal bureaucrats already have too much power over 
health care. Today, physicians struggle with over 132,000 pages of 
Medicare regulations. To put that in perspective, I ask my colleagues 
to consider that the IRS code is ``mere'' 17,000 pages. Many physicians 
pay attorneys as much as $7,000 for a compliance plan to guard against 
mistakes in filing government forms, a wise investment considering even 
an innocent mistake can result in fines of up to $25,000. In case 
doctors are not terrorized enough by the federal bureaucracy, HCFA has 
requested authority to carry guns on their audits!
  In addition to the Medicare regulations, doctors must contend with 
FDA regulations (which delay the arrival and raise the costs of new 
drugs), insurance company paperwork, and the increasing criminalization 
of medicine through legislation such as the Health Insurance 
Portability Act (HIPPA) and the medical privacy regulations which could 
criminalize conversations between doctors and nurses.
  Instead of this phony argument between those who believe their form 
of nationalized medicine is best for patients and those whose only 
objection to nationalized medicine is its effect on entrenched 
corporate interests, we ought to consider getting rid of the laws that 
created this medical management crisis. The ERISA law requiring 
businesses to provide particular programs for their employees should be 
repealed. The tax codes should give equal tax treatment to everyone 
whether working for a large corporation, small business, or self 
employed. Standards should be set by insurance companies, doctors, 
patients, and HMOs working out differences through voluntary contracts. 
For years it was known that some insurance policies excluded certain 
care. This was known up front and was considered an acceptable practice 
since it allowed certain patients to receive discounts. The federal 
government should defer to state governments to deal with the 
litigation crisis and the need for contract legislation between 
patients and medical providers. Health care providers should be free to 
combine their efforts to negotiate effectively with HMOs and insurance 
companies without running afoul of federal anti-trust laws--or being 
subject to regulation by the National Labor Relations Board (NLRB).
  Of course, in a truly free market, HMOs and pre-paid care could and 
would exist--there would be no prohibition against it. The Kaiser 
system was not exactly a creature of the government as it the current 
unnatural HMO-government-created chaos we have today.
  Congress should also remove all federally-imposed roadblocks to 
making pharmaceuticals available to physicians and patients. Government 
regulations are a major reason why many Americans find it difficult to 
afford prescription medicines. It is time to end the days when 
Americans suffer because the Food and Drug Administration (FDA) 
prevented them from getting access to medicines that where available 
and affordable in other parts of the world!

  While none of the proposed ``Patients' Bill of Rights'' addresses the 
root cause of the problems in our nation's health care system, the 
amendment offered by the gentleman from Kentucky does expend individual 
control over health care by making Medical Savings Accounts (MSAs) 
available to everyone. This is the most important thing Congress can do 
to get market forces operating immediately and improve health care. 
When MSAs make patient motivation to save and shop a major force to 
reduce cost, physicians would once again negotiate fees downward with 
patients--unlike today where the reimbursement is never too high and 
hospital and MD bills are always at the maximum levels allowed. MSAs 
would help satisfy the American's people's desire to control their own 
health care and provide incentives for consumers to take more 
responsibility for their care.

[[Page H5217]]

  There is nothing wrong with charity hospitals and possibly the 
churches once again providing care for the needy rather than through 
government paid programs which only maximizes costs. States can 
continue to introduce competition by allowing various trained 
individuals to provide the services that once were only provided by 
licensed MDs. We don't have to continue down the path of socialized 
medical care, especially in America where free markets have provided so 
much for so many.
  In conclusion, Mr. Chairman, I urge my colleagues to reject the phony 
Patients' Bill of Rights which will only increase the power of the 
federal government, cause more Americans to lose their health care or 
receive substandard care, and thus set the groundwork for the next 
round of federal intervention. Instead. I ask my colleagues to embrace 
an agenda of returning control over health care to the American people 
by putting control over the health care dollar back into the hands of 
the individual and repealing those laws and regulations which distort 
the health care market. We should have more faith in freedom and more 
fear of the politicians and bureaucrats who think all can be made well 
by simply passing a Patients' Bill of Rights.
  Mr. CUNNINGHAM. Mr. Chairman, I rise today to add my voice in support 
of the passage of a strong Patient's Bill of Rights. Congress has been 
working for several years to improve the delivery of health care to 
everyone in America. As a cancer survivor, I know how important it is 
to have good quality health care available when you need it.
   I believe that for the most part, Americans who currently have 
health insurance are happy with their providers. Unfortunately, too 
many Americans can not afford the health care they need, and sadly, 
there are extreme cases where some Americans are the victims of fraud 
or abuse that prevent them from accessing the care that they are paying 
for.
  I am committed to ensuring that America maintains the world's best 
health care system by enacting reforms giving people more choices, and 
more access to high quality health care. That is why I rise today in 
support of the Patients' Bill of Rights agreement reached by President 
George W. Bush and Congressman Charlie Norwood, as well as in support 
of an amendment to expand Medical Savings Accounts (MSA) and allow for 
the creation of Association Health Plans (AHP).
  I am proud to support a Patients' Bill of Rights that will empower 
individuals and doctors to make health care choices, without the 
interference of government bureaucrats or trial lawyers. I support the 
Bush/Norwood agreement because it ensures that the American people will 
have swift recourse when an insurance company bean-counter decides to 
practice medicine.
  There are a lot of people who say that when your insurance company 
denies coverage, you should be able to run them straight into court. 
Let's stop and think about that for a minute--when an individual is 
denied coverage by an insurance company, what is it that they really 
want? Coverage for life saving medical care! Lawsuits don't get you 
medical care. Lawsuits drag on in court for years, and line the pockets 
of trial lawyers. Lawsuits won't provide care for sick patients. The 
bottom line is that lawsuits don't save lives--but an independent 
medical review process will.
  While we are working to improve health care for those who have 
insurance, we must also take action to bring this high quality care to 
those who cannot currently afford insurance. I support the inclusion of 
a provision to give millions of Americans the best patient protections 
of all--health care coverage. I hope that today an amendment will 
prevail to expand Medical Savings Accounts, and allow for the creation 
of Association Health Plans. Association Health Plans will allow small 
businesses and the self-employed the same purchasing clout and 
administrative savings that large, multi-state employers and labor 
unions currently enjoy. This provision will expand health care coverage 
for thousands of employees of small businesses who cannot currently 
afford to provide coverage to its employees.
  I urge my colleagues to join me in supporting the passage of the 
Bush/Norwood agreement on Patients' Rights which balances the need for 
affordable health insurance with the need for real patient protections.
  Mr. ETHERIDGE. Mr. Chairman, I rise today in support of H.R. 2563, 
the Patients Bill of Rights, and in opposition to all ``poison pill'' 
amendments and in particular the Norwood amendment.
  Like many of my colleagues in this House, I strongly support the 
Patients Bill of Rights. In fact, the Ganske-Dingell Patients Bill of 
Rights provides strong patient protections. It ensures access to 
emergency room care, allows for clinical trials, provides for 
continuity of care, and holds managed care plans legally responsible 
for their actions. But, today we have been asked to consider a new 
amendment to this bill. This amendment, if passed, would gut the spirit 
of the Ganske-Dingell bill.
  The Norwood amendment would give HMO's a rebuttable presumption in 
court, which means that if an HMO follows its procedures in the review 
process, the patient bringing a suit would be held to a higher standard 
of evidence that separates HMO's from any other industry, business, or 
individual in America. Mr. Speaker, that higher standard prevents a 
patient from making a case in court. That is unfair and it is wrong.
  We must hold HMO's and health insurance companies accountable for 
their actions, and I will oppose any amendment that protects HMO's and 
prevents patients from getting the care they need. If this amendment 
passes, I will oppose the amended bill because it will become 
unenforceable and will let HMO's off the hook. A right that is 
unenforceable is no right at all.
  Mr. Chairman, I have consistently supported a patient's bill of 
rights that is strong and enforceable. Today, I am afraid, the House 
majority is going to pass an insurance company's bill of rights. 
Maintaining health security is one of the primary challenges facing 
North Carolina's working families today. Families deserve to know that 
they can count on affordable high quality health care in their managed 
care plans. Making crucial decisions about a patient's health care 
should be the responsibility of the doctor and the patient--not some 
insurance company accountant.
  Today's debate is about patients. They are the Americans we hear 
about in the news and in our communities who are sick and hurting. A 
real patients bill of rights provides these Americans with access to 
the care they need and holds managed care plans legally accountable for 
decisions that lead to serious injury or death. The Republican 
leadership supports the Norwood amendment because it will send this 
bill to a conference. And we all know what that means, Mr. Chairman. 
The Patient's Bill of Rights will die there.
  America needs a Patients Bill of Rights. Our families are depending 
on us to give them that right today in this House. The only way we can 
ensure that they will get that right--the right to clinical trials, 
emergency room care, and to hold HMO's accountable for their 
decisions--is to oppose all of the ``poison pill'' amendments proposed 
today and support the real patient's bill of rights. The Republican 
bill is a fraud. It is a sham bill.
  I urge all of my colleagues to support H.R. 2563, and ask that they 
join me in opposing the Norwood amendment and other poison pills that 
will kill a bill that America's patients desperately need.
  Mr. COYNE. Mr. Chairman, it is time for Congress to enact a true 
patient protection bill. American families have already waited far too 
long for us to pass common-sense consumer protections.
  Today, millions of Americans workers have no employer-provided health 
insurance, and over half of American Workers who do have employer-
provided health insurance have no choice of health plan. The only 
health care coverage provided to those workers is a plan chosen by 
their employers. This plan may or may not address their health care 
needs and the health care needs of their families. Under current law, 
many of those workers and their families have no place to turn if they 
are harmed by decisions which are made by their insurance companies.
  We need to pass a true consumer protection bill that would guarantee 
basic health rights for these workers. Families should be able to see 
specialists when they need to, appeal unfair denials, and seek 
emergency care when they experience severe pain. Doctors should be free 
to tell their patients all the options and to make medical decisions 
without fear of retribution from health plans. Health plans should be 
accountable if they make medical decisions, just as doctors are now.
  Some would suggest that enacting true patient protection legislation 
undermines our long-held goal of health coverage for all Americans. 
They say that patient protection legislation could cause health 
insurance costs to rise and then families may become uninsured. They 
would have us believe that a health insurance plan that protects basic 
health care rights is out of reach for the average American. That is 
wrong. It is our responsibility to find a better way to help the 
uninsured than telling them to buy bad health coverage, coverage which 
may not be there when they need it.
  Unfortunately, an unfair process to debate a meaningful patient 
protection bill has been set up by the Leadership of the House of 
Representatives today and this action effectively kills any chance of 
enacting a real patient protection bill. The bill being debated today 
contains numerous loopholes and fails to enact proper patient 
protections and rights. It fails to hold health plans accountable by 
the same standards that are applied to physicians for negligent 
decisions. All actions against health plans would be determined 
exclusively under a new federal law with no ability to apply state law. 
As well, when an injured patient does go to court to seek remedy, 
certain provisions in the legislation will tip the scales of justice in 
favor of the health plan. This bill also contains

[[Page H5218]]

week enforcement provisions that dramatically limits the ability of 
consumers to seek recourse for inadequate care, injury, or death. 
Furthermore, it forces patients to pursue remedies in an external 
appeals process that is neither independent or fair.
  I would urge my colleagues to vote against all of the amendments. If 
any of the amendments are adopted, I would then urge a ``no'' vote on 
final passage. I hope that we can work together in the future to enact 
a true bipartisan patient protection bill.
  Mr. TOWNS. Mr. Chairman, I rise in opposition to the amendment 
offered by the gentleman from Georgia. I strongly support the Ganske-
Dingell-Berry Bipartisan Patient Protection Act without the Norwood-
Bush ``COMPROMISE'' or any other poison pill amendments.
  For the past five years, we have been fighting for true patient 
protection legislation only to be thwarted at every turn by a lethal 
combination of parliamentary maneuvers and political posturing. The 
Norwood-Bush Compromise is just another maneuver designed to water down 
real patient protection legislation.
  Mr. Chairman, it is time that we return medical decisions to the 
people qualified to make them. It is time that we stop limiting the 
drugs available to patients based on an accountants' formula. It is 
time that we return to the American people the right to choose their 
own healthcare providers. The Ganske-Dingell-Berry Bipartisan Patient 
Protection Act stops protecting the HMO's and provides true patient 
protection. I support protecting patients while the amendments before 
us today will give all of the rights to HMO's at the expense of 
patients. The only thing that the Norwood-Bush ``Compromise'' 
compromises is a patient's access to quality care. I support the 
Ganske-Dingell-Berry Bipartisan Patient Protection Act because I 
believe that it offers patients the protection they need. Access and 
accountability must be the cornerstones of any true patient protection 
plan and Ganske-Dingell-Berry will ensure that accountability.
  Don't fall for cheap imitations; the Ganske-Dingell-Berry Bipartisan 
Patient Protection Act is strong, enforceable patient protection 
legislation.
  The American people are crying out for patient protection. We cannot 
continue to have a healthcare system that claims to offer the best 
healthcare in the world and yet allows business decision makers the 
right to limit access to top quality care. I urge my colleagues to 
provide true patient protection and vote for the Ganske-Dingell-Berry 
Bipartisan Patient Protection Act without amendments.
  Mr. PASCRELL. Mr. Chairman, I stand before you to remind everyone 
here why we must pass the patients Bill of Rights today. It is because 
we must protect all Americans from the fate that befell Mr. Robert 
Frank Leone of Glen Ridge, N.J.--a constituent of mine.
  Every year, Mr. Leone was denied a chest x-ray by his HMO despite his 
request. When he eventually displayed symptoms of illness, his Doctor 
acquiesced and his cancer was diagnosed.
  Mr. Leone had non-small cell lung cancer that spread to his brain. 
His wife Victoria was told that he had only 2 months to live.
  After successful treatment with radiation, Mr. Leone and his wife had 
to beg his doctors for a referral for physical therapy.
  As a result of physical therapy, Mr. Leone regained much of his 
strength and quality of life.
  But his HMO cut his physical therapy sessions as soon as he started 
to feel better. They said it was no longer necessary. They said it was 
``preventative.''
  As a result of losing his physical therapy, Mr. Leone's health began 
fading. Soon he could no longer walk without assistance.
  Despite pleas form his wife, his HMO refused to restore Mr. Leon's 
physical therapy benefit. Instead, they suggested he join a health 
club. And that his wife Victoria should become his physical therapist! 
But Victoria is legally disabled!
  Mr. Leone became depressed and was hospitalized and died in the 
hospital March 30, 1999.
  I call him an HMO casualty.
  If his doctor had given him a chest x-ray when he requested it, 
instead of denying the benefit to save money--his cancer would have 
been diagnosed before it had spread to his brain.
  If the HMO had not limited Mr. Leone's access to physical therapy, he 
would have continued his improvement and would probably have not sunk 
into depression.
  If an appeals process had been in effect, Mr. Leone and his wife 
could have appealed both of these denials of care.
  Simply put, Mr. Leone died because the HMO was not liable for its 
actions. And because the HMO was not liable they could deny him care to 
save money and not be held accountable.
  Today on the floor we are voting on H.R. 2563 to protect patients 
just like Mr. Leone.
  But then there is this Norwood amendment.
  Well, you don't have to be Columbo to recognize that the Norwood 
amendment is here to take the teeth out of this crucial legislation.
  The Norwood amendment creates several roadblocks that would prevent 
patients form receiving benefits that already exist.
  Additionally, the Norwood amendment supercedes state laws and forces 
state courts to apply federal tort law.
  In fact, this amendment creates a federal cause of action for 
negligence where none exited before!
  I am particularly interested in safeguarding strong state laws that 
protect patients because my state of New Jersey just recently 
instituted a strong patients' bill of rights that would be preempted by 
the Norwood amendment!
  New Jersey's new patients' rights' law is much broader in scope than 
even the Ganske bill we are discussing here today. It covers 
traditional HMOs, as well as health insurance plans that are not 
covered by ERISA.
  How can I go home and tell my constituents that the strong patients' 
bill of rights recently made into law in New Jersey will never have the 
opportunity to benefit our residents?
  And that is not the only problem presented in this amendment.
  The Norwood amendment creates a presumption in favor of the HMO that 
the patient must overcome in order to win in court.
  This flies in the face of due process, a premise upon which our 
country is founded. It offends me to the core that this amendment not 
only restricts access to state law by patients but then adds an 
additional hurdle to their burden of proof once in court.
  If the Norwood amendment had been law when Mrs. Leone was taking care 
of her husband, these additional obstacles would have made this 
heartbreaking experience even more painful. She would have had no 
access to her own state's laws, no fair due process, and a limited 
amount of damages to seek.
  I shake my head whenever I think of how we could have saved Mr. 
Leone's life if we had only passed the Ganske bill 5 years ago.
  Let's not let any more Americans die at the hands of corporations 
whose sole concern is the bottom line not the patients' health.
  I urge all of you in joining me to vote in favor of H.R. 2563 and 
against the Norwood amendment. Do it for Mr. Leone and all for the 
future patients who we could save with this important vote.
  Mr. BALDACCI. Mr. Chairman, I have long supported the efforts of Mr. 
Norwood to reform managed care. Unfortunately, I cannot support my 
friend's lastest legislative effort on this issue. Instead, I remain 
strongly in favor of the Ganske-Dingell-Berry bill, H.R. 2563. This is 
the only Patients' Bill of Rights legislation we are considering today 
with sufficient enforcement provisions. Without strong accountability, 
the landmark patient protections we agree are necessary will be 
rendered meaningless.
  The Norwood amendment, based on his agreement with President Bush, is 
an empty shell, tipping the balance back to the insurance companies and 
away from patients. This Norwood plan is significantly weaker than the 
bill passed by the Senate.
  Congressman Norwood's amendment places unacceptable limits on a 
patient's ability to hold his or her plan accountable. Self-funded 
plans may only be sued in federal courts. This provision limits access 
to state courts for many Americans covered under employer-sponsored 
health insurance plans. Even when a patient can seek a resolution 
through state court, they can only do so under federal rules, which are 
more restrictive for plaintiffs.
  Patients have a larger burden to bear under the Norwood language. 
They can sue if an independent reviewer decides against them, but the 
legal presumption would be that the external review was correct. Under 
this scheme, the burden of proof is placed on the patient, who must 
meet a higher legal standard of proof than when he or she appealed to 
the review panel.
  The liability provisions of this amendment are so complex and 
convoluted that they will only serve to dissuade patients from seeking 
resolution to their grievances.
  Under the Norwood amendment, doctors will continue to be held to 
tougher state malpractice standards than HMOs. Managed care plans will 
still play by different rules than the physicians whose decisions these 
companies overrule. This is not acceptable.
  Americans deserve better than this shallow version of patients' 
rights legislation. I urge my colleagues to soundly reject the Norwood 
Amendment and to support the Ganske legislation.
  MR. EVANS. Mr. Chairman, today we have the opportunity to pass a 
strong, enforceable Patients' Bill of Rights. A bill that would return 
medical decisions to patients and their doctors. A bill that would 
strip HMOs of their unprecedented protections which allow them to make 
decisions about patients' care while being held accountable to no one. 
A bill that puts quality health care above the bottom line of insurance 
companies.

[[Page H5219]]

  I hope that we will pass these new patients' rights protections 
today. But these rights are meaningless without the ability to enforce 
them. The Ganske-Dingell Patients' Bill of Rights is the only measure 
that protest these rights.
  The so-called compromise, hastily crafted by the President and Mr. 
Norwood, renders these rights hollow. It effectively eliminates any 
incentive for HMOs to put the care of patients first. The limited 
damages that could be awarded once a HMO is found liable for the actual 
injury or death of a patient are not effective checks on irresponsible 
conduct. They are financially inconsequential compared to their 
enormous profit margins. It is the equivalent of a slap on the wrist.
  Americans deserve better. They deserve the rights that we have 
promised them and an avenue of recourse when those rights are violated. 
I urge my colleagues to support the real Patients' Bill of Rights, not 
a skeleton of what could have been.
  Mr. THORNBERRY. Mr. Chairman, I will vote for the Patient Protection 
Act legislation that the House is considering.
  I voted for a similar bill two years ago because I believe that if an 
insurance company makes health care decisions like a doctor, it should 
be held responsible like a doctor. I still support a responsible 
patients rights bill.
  We are all aware of the concerns over this measure: concerns that it 
could drive up healthcare costs, encourage more litigation, and result 
in even more people becoming uninsured, particularly in rural areas. I 
am especially concerned about how this bill will affect patient 
protection laws that have been enacted in Texas and other states around 
the country.
  While I am not satisfied that this measure, as written fully 
addresses my concerns, I will vote for this bill to move it to 
Conference where, hopefully, many of these problems can be resolved. I 
stand ready to vote against the measure when it returns to the House 
floor if this does not occur.
  It is my sincere hope, though, that this will not happen, and we will 
be able to reach agreement on a bill that responsibly strengthens 
patients' rights which the President will be able to sign into law.
  Mrs. MALONEY of New York. Mr. Chairman, I rise in strong support of 
the Patients' Bill of Rights. It is a measure that embodies much of the 
spirit of our original Bill of Rights. It improves the lives of 
millions of Americans by guaranteeing their basic rights as health care 
patients. The Bipartisan Patient Protection Act enjoys strong support 
from the American people and grants all 167 million privately insured 
Americans the fundamental protections they deserve.
  The bill we are debating today, H.R. 2563, was forged by the hard 
work of Messrs. Dingell, Ganske, Norwood, Berry and many others. The 
base bill will make the health of patients, and not the wants of 
managed care insurers, the top priority. If a patient is harmed by HMO 
negligence, he or she should be able to seek legal redress; under this 
legislation the patient will be able to do just that. The Patients' 
Bill of Rights will guarantee these protections and do much more to 
improve the lives of millions of our citizens--all without increasing 
healthcare costs significantly.
  We also have before us three amendments. They are three amendments 
that are poison pills to the underlying bill and I cannot support them. 
The Norwood amendment weakens the strong and sensible Dingell-Ganske 
bill. It holds HMOs to a lesser standard than doctors and hospitals and 
it undermines state patient protections. The Thomas-Fletcher amendment 
fully expands Medical Savings Accounts and would allow associations to 
offer health insurance to their members without critical state 
insurance standards. This amendment could actually cause more people to 
become uninsured. The Thomas-Boehner amendment preempts state medical 
malpractice and tort law. The bottom line: these amendments do not 
strengthen the base bill, but weaken it. If these amendments pass, I 
will vote ``no'' on final passage.
  Protecting patients' rights inherently benefits women and their 
families because women are the primary healthcare consumers. More 
specifically, the underlying legislation gives American women direct 
access to an obstetrician-gynecologist and gives families direct access 
to specialists, such as pediatricians, without a referral. Women need 
regular, accessible OB/GYN care. They do not need the added expense and 
hassle of having to get a ``permission slip'' from their managed care 
insurer.
   I am fortunate to represent a state that has enacted very 
comprehensive regulations that mandate direct-access to OB/GYNs without 
a gatekeeper's pre-approval. But, the Norwood amendment would roll-back 
state protections. I support the underlying bill because we must have a 
federal standard. Why? Look at the numbers: 15 states limit the number 
of times a women see her OB/GYN; another 12 prohibit or restrict a 
woman's direct access to follow-up care, even if this care is covered 
by her health plan; and a full 38 prohibit or restrict an OB/GYN's 
ability to refer a woman for necessary OB/GYN-related specialty care.
  Obstetric and gynecological care is integral to women's health. As 
things stand now, women in some states receive better care than others. 
It's time we made direct access to OB/GYNs a fundamental patient 
protection enjoyed by all women enrolled in managed care plans.
  The Bipartisan Patient Protection Act protects the health and well-
being of not just women, but all Americans. Every American will have 
the right to choose his or her own doctor, and will not be forced to 
see one chosen by an HMO bureaucrat. Under this legislation, doctors, 
not health insurance companies, will decide which treatments, 
procedures and specialists are necessary.
  In addition, the legislation--absent any amendments--will give 
patients the peace of mind that all external reviews will be conducted 
by independent, qualified physicians. If a plan denies coverage, the 
patient will be able to appeal the decision to a doctor, not an 
insurance clerk. And if the plan continues to deny coverage, the 
patient can demand a review by an unbiased, independent medical 
specialist, whose decision is legally binding.
  Image if you or someone you love is injured by the decision of an 
HMO. It is only fair that he or she should be able to hold that HMO 
accountable. We would all rather get the care we and our families need 
to begin with than go to court in the end, but we should have the right 
to do so if administrative course of redress are exhausted. Under the 
Dingell-Ganske bill--absent any amendments--disputes involving medical 
judgments will be subject to applicable state laws; if the case 
involves an administrative benefit decision, the patient will be able 
to seek limited compensation in federal courts under federal law. 
Employers need not fear this bill. They will be protected from 
liability in either federal or state courts, unless they directly 
participate in a decision that causes irreparable harm or death. 
Indeed, employers can completely ensure that they will be fully 
protected from liability by choosing a ``designated decision-maker'' to 
assume all liability.
  The critics of the Bipartisan Patient Protection Act also claim that 
these common-sense liability provisions will cost too much. In fact, 
the Congressional Budget Office reported that the liability provisions 
will cost only about 23 cents per employee per month. The entire bill 
is projected to increase premiums 4.2% over 5 years. That translates to 
a mere $1.20 per month. Isn't quality, protect healthcare worth the 
added price of a cup of coffee?
  By allowing direct-access to OB/GYNs and pediatricians, authorizing 
physicians and not HMOs to make medical decisions, and establishing 
avenues for legal recourse, the Bipartisan Patients Protection Act puts 
the health of patients first. It will make a real difference in the 
quality of lives of millions of Americans. And that is what the work we 
do here is all about.
  I urge my colleagues to vote against the three poison pill amendments 
and for a clean Dingell-Ganske-Norwood-Berry bill.
  Ms. ROYBAL-ALLARD. Mr. Chairman, I rise in reluctant opposition to 
the Ganske-Dingell-Norwood-Berry Patients' Bill of Rights.
  We missed an enormous opportunity today, because H.R. 2563--the 
Ganske-Dingell bill--could have been the giant first step to bring 
much-needed reform to our current health care system.
  Simply speaking, the current system is stacked against patients, 
placing important decision-making authority in the hands of corporate 
bureaucrats. Today, we had the opportunity to give back the power to 
patients and their doctors.
  Instead, the Republican-controlled House chose to adopt changes that 
have put patient protections in jeopardy. By stacking the deck against 
patients in the appeals process, and by placing caps on damages, we 
avoid providing any meaningful remedy to those who are injured by a 
negligent HMO. We essentially turn the system on its head and assume 
that the doctors and patients are the guilty ones, unless they can 
prove otherwise.
  Mr. Chairman, I represent a district that is 87% Hispanic. Recent 
studies tell us that two-thirds of privately insured Latinos are 
enrolled in managed care. The Ganske-Dingell-Norwood-Berry reform bill 
could have had a tremendous positive impact on my constituents. And it 
could have helped ensure that people across the country, such as my 
constituents, had better access to prescription drugs, emergency care 
and medical specialists. But we have fallen short today.
  I certainly hope that at conference we can make improvements to this 
bill that will put patients before the insurance companies. If we 
succeed in addressing the unfairness in this bill, we can then take the 
next step to address the needs of countless numbers of low-income 
workers who have no health coverage whatsoever; and the 1.2 million 
eligible adults and children in California who, according to a recent 
article in the Los Angeles Times, do not access California public 
health care programs.

[[Page H5220]]

To truly reform health care in our nation for all Americans, we must 
continue to work to extend coverage to the working poor, and to ensure 
that those who are eligible for existing health care benefits receive 
them.
  Adequate, affordable, and accessible health care should be a right, 
not a privilege. The House had the change to take a significant step 
forward today in addressing the health care problems in our nation. But 
instead of taking a step forward, we have taken a step backward.
  Ms. SCHAKOWSKY. Mr. Chairman, I rise in opposition to H.R. 2563, the 
Patient Protection Act. This bill has been so damaged by the amendments 
passed today, that it should be a violation of truth in advertising 
laws to call it a patient protection bill. It is no longer a law 
designed to curb HMO abuses--it has become a bill that leaves HMOs in 
charge of health care decision-making and preempting state laws 
designed to protect patients. It is a bill that is no longer deserving 
of its title and is no longer deserving of our support. It's an 
Insurance Industry Protection Act.
  Earlier today, the House passed the Thomas amendment to establish 
Association Health Plans. Despite the arguments of its proponents, AHPs 
are not a step forward. Instead, AHPs will take critical state 
protections away from consumers and make access to health care worse 
for millions of Americans.
  I believe that we need to make health care more affordable and 
accessible to small businesses and their employees. I support 
purchasing coops and pooling arrangements. But I could not support this 
amendment. Why? Because it would do more harm than good. By preempting 
state regulations designed to lower premiums and protect consumers, it 
would move us backwards not forward.
  First, it would actually raise premiums for the majority of small 
businesses. The Congressional Budget Office estimates that 80 percent 
of small business employees could face premium increases as companies 
with healthier employees opt out of the small group market. With market 
fragmentation, small firms with older workers, women of child-bearing 
age, and workers with ongoing health problems would wind up paying 
more.
  Second, as a result, those small businesses facing higher premiums 
would drop coverage. The CBO estimates that 10,000 employees--those 
with the highest health are needs--would lose coverage. An Urban 
Institute estimate is that one percent of all small firms would lose 
coverage.
  Third, even insured consumers could face higher costs and reduced 
access because AHPs would be allowed to ignore state minimum benefit 
requirements. In Illinois, those minimum benefits include annual pap 
smears, prosthetic devices, mental health services, cancer screening, 
education on diabetes self-management, and length of stay protections 
for mastectomy patients. Consumer' Union opposes AHPs because ``health 
insurance policies would be less likely to cover potentially life-
saving benefits such as mammography screening, cervical cancer 
screening, and drug abuse treatment.'' AHPs will lead to bare-bones 
coverage that leaves patients with higher medical bills or forces them 
to go without care.
  Fourth, consumers enrolled in AHPs would have no place to go for 
protection, since state regulation is preempted and the U.S. Department 
of Labor lacks the resources or the will to respond to individual 
consumer complaints.
  The National Governors Association, the National Conference of State 
Legislatures, and the National Association of Insurance Commissioners 
said it best when they wrote to us opposing this bill. They wrote: 
``AHPs would fragment and destabilize the small group market, resulting 
in higher premiums for many small businesses. AHPs would be exempt from 
the state solvency requirements, patient protections, and oversight and 
thus place consumers at risk.''
  I also strongly oppose the Norwood liability amendment. Many of us 
won election last November because we promised that we would give 
patients meaningful protections. We promised that we would curb HMO 
abuses that are injuring and killing people on a daily basis.
  We promised that we would let medical professionals make medical 
decisions. We told doctors, nurses and other health care professionals 
that we would free them from managed care bureaucracy so that they can 
provide quality care to their patients. This amendment means that we 
will not be keeping those promises.
  This amendment is a ruse. Behind all the fine print, it has one 
underlying objective: to continue the accountability shield that 
immunizes HMOs from responsibility when they deny care or limit care or 
restrict access to specialists. This amendment means that there is 
absolutely no guarantee that patient protections will be enforced. HMOs 
will be left in charge, free to continue to override doctors' decisions 
and deny care with virtual impunity.
  This amendment provides special treatment for HMOs. It gives HMOs 
unique legal protections--protections denied every other industry in 
this country--so that they can continue to operate with immunity.
  Mr. Chairman, we have done a disservice to patients and those who 
care for them by passing these amendments. There is an old labor song 
that asks the question: whose side are you on? Unfortunately, this 
amended bill sides with the HMOs--not patients.
  Mr. HONDA. Mr. Chairman, I rise today in strong opposition to H.R. 
2563, the so-called Bipartisan Patient Protection Act, as amended.
  Patient protection is common sense legislation that America needs and 
deserves. The original bill, as proposed, provided much needed security 
for the 160 million Americans who receive their health coverage through 
managed care. It gave healthcare consumers the same protections offered 
in other industries. It provided accountability, minimum standards of 
care, and broader access to health-care options for Americans citizens.
  Recently, a constituent of mine, Andrew B. Steffan of Campbell, 
California has had an outrageous experience, showing exactly why this 
important legislation is needed.
  This past April, Mr. Steffan experienced difficulty breathing and 
chest discomfort and was transported by ambulance to Good Samaritan 
Hospital in San Jose. In the ambulance he was monitored by EKG and was 
administered oxygen to help him breath, and nitroglycerin for his chest 
pain. He was later diagnosed with coronary heart disease and congestive 
heart failure.
  I can only begin to imagine the fear and anxiety experienced by Mr. 
Steffan and his family on that day.
  What is even more incomprehensible are the problems faced by Mr. 
Steffan after his hospitalization. His insurance determined, after the 
fact, that he should have been transported to the hospital by ``other 
means'' and refused to pay, despite the fact that the attending 
physician at the hospital stated that he needed to be transported 
because he required cardiac monitoring.
  How can an insurance professional determine after the fact that an 
ambulance ride was or was not necessary? Moreover, how can a health-
care provider refuse to cover basic emergency services that a normal 
person would consider necessary? It is bad enough when serious health 
problems develop. One should not have to deal with a larger problem 
from one's insurance company.
  The need for this type of legislation is inarguable. However, the 
Norwood Amendment, agreed to in a secret handshake deal with the 
President, has sabotaged any chance for real medical reform.
  This amendment, which takes us backward, not forward, contains 
numerous provisions which enable managed care providers to never face 
the consequences of their actions.
  Under the amended bill, HMOs are held to a different standard than 
doctors and hospitals. While HMOs would be shielded, with a limit of 
$1.5 million for punitive damages, doctors and hospitals would be hung 
out to dry. It allows insurance companies to make bad decisions and 
never be held accountable.
  Under the Norwood Amendment, the injured patient must prove that 
``the delay in receiving, or failure to receive, benefits is the 
proximate cause of personal injury to, or death of, the participant or 
beneficiary.'' In any medical malpractice case--unlike a running a red 
light being the proximate cause of the ensuing accident--there is 
rarely, if ever, a single cause of the injury.
  The amendment overturns the good work done by states in protecting 
patients.
  Furthermore, certain cases can be removed to the federal courts, 
where it is much more difficult for patients to achieve justice.
  Yes, America's citizens need healthcare protection. But a sham, 
ineffective bill is not the answer. What good are patient protections 
if these rights cannot be effectively enforced in court?
  I urge my colleagues to follow the lead of the other body and pass 
forceful, effective, meaningful legislation.
  Mr. RUSH. Mr. Chairman, like many of my colleagues, I have been a 
staunch advocate for patients' rights. I have looked forward to the day 
when this House would once again pass a strong patients' bill of rights 
which would bring back responsibility and accountability to the 
relationship between HMOs and their patients.
  The Bipartisan Patient Protection Act, H.R. 2563, as originally 
brought to the Floor today by Representative John Dingell and 
Representative Greg Ganske was a model of bipartisanship and fairness. 
The bill brought equality to the patient and HMO relationship by 
providing for an internal and external review process of denials of 
care and permitting patients to sue their HMOs in state and federal 
courts. To ensure that the pendulum did not swing too far to one side, 
the bill also capped punitive damages at $5 million. Further, to 
protect employers from frivolous suits, the bill only held employers 
liable if they administered their plan themselves. Clearly, the

[[Page H5221]]

bill as it was originally intended provided patients the means they 
needed to protect their right to quality care.
  Unfortunately, with the adoption of Representative Norwood's 
amendment, the Bipartisan Patient Protection Act was stripped of its 
provisions allowing patients to sue their HMOs for the unfair denial of 
needed health care. Patients will now find themselves in an even more 
hostile and unresponsive environment.
  It is for this reason that I must regrettably rise in opposition to 
the Bipartisan Patient Protection Act as amended by Representative 
Charles Norwood. I can only hope that the changes made to the 
Bipartisan Patient Protection Act can be revisited in conference.
  Mr. GILMAN. Mr. Chairman, I rise today in support of H.R. 2563, the 
Bipartisan Patient Protection Act of 2001, otherwise known as the 
Ganske-Dingell-Norwood bill. Over the past 6 years, I have worked with 
my colleagues, Dr. Ganske, Mr. Dingell and Dr. Norwood, on trying to 
bring a comprehensive, bipartisan patient protection bill to the floor, 
and I believe that H.R. 2563 is this bill.
  The Ganske-Dingell bill will provide individuals with managed care 
insurance plans, with an unprecedented amount of protections, 
including: the right to choose their own doctor, access to specialists, 
gag clause protections, information disclosure and access to emergency 
services. Moreover, the passage of this bill will mark the first time 
that patients throughout the nation will have the ability to hold their 
HMOs accountable for injuries or deaths which result from denials or 
delays of claims by the HMO.
  H.R. 2563, has the support of over 800 organizations, including the 
American Medical Association, American Cancer Society, American Heart 
Association, National Breast Cancer Coalition, Patient Access to 
Responsible Care and National Health Association. These organizations 
recognize that the Ganske-Dingell bill is going to provide the 
necessary protections against abuses by the managed care industry.
  I applaud the efforts of Representatives Ganske, Dingell, Norwood and 
Berry for bring this important measure to the floor and for their 
dedication to this issue through the years.
  Moreover, I commend Dr. Norwood for his continued commitment to 
ensuring that a Patients' Bill of Rights passes the House and has the 
opportunity to receive full and fair consideration by the Congress and 
the President. I understand that he has given his best efforts to 
negotiate a sound amendment which will have the opportunity to be 
reviewed and reconsidered in the legislative process.
  Having said that, I do have concerns with the amendment introduced by 
Representative Norwood.
  Foremost, the Norwood amendment fails to hold health plans 
accountable by the same standards that apply to physicians for 
negligent medical decisions. Rather than defer to state statutory law 
and hundreds of years of common law, the Norwood amendment would create 
a new status of health plans that injure or kill patients by their 
negligent treatment decisions. All actions against health plans would 
be determined exclusively under a new federal law while doctors and 
hospitals would be subject to less stringent state laws.
  Additionally, the Norwood amendment includes a provision that grants 
health plans a ``rebuttable presumption'' in court when the external 
review panel has found in their favor. A patient would now be forced to 
prove that the decision of the external review panel was unreasonable, 
rather than only providing that the HMO was responsible for serious 
injury or death.
  The most difficult portion of the Norwood amendment is that it strips 
the states of the rights they currently enjoy. It fails to recognize 
those states that already have external review systems and not allowing 
them to remain in place. Under Ganske-Dingell, states that already have 
a substantially similar, if not superior external review system in 
place, would be able to continue overseeing these systems. Ganske-
Dingell sets a federal standard and allows states to provide additional 
protections if they choose to, while the Norwood amendment mandates a 
federal cap which prohibits states from providing additional 
protections.
  States like New York, which currently has a superior external review 
process compared to the regulations outlined in Norwood, would be 
forced to follow an inferior external review system.
  I hoped to come to the floor today to support a bipartisan proposal 
that had the full backing of all 4 sponsors of H.R. 2563, the House 
leadership and the White House.
  Unfortunately, we have come to a cross roads. Our sponsors are in 
disagreement, the President has pledged, for his reasons, to veto the 
Ganske-Dingell-Norwood bill in its present form, the Minority has begun 
to politicize this issue to the detriment of real reform, and we are 
now forced to make a decision between passing a Patient's Bill of 
Rights or passing up the opportunity to allow myself, Dr. Ganske, Dr. 
Norwood, Mr. Dingell, Mr. Berry and other Members of Congress to 
pressure the Senate and the White House in conference to remedy those 
provisions which weaken this measure.
  In light of this unfortunate situation, I will not kill our 
opportunity to continue our work on behalf of patient's throughout our 
nation and pass a bi-partisan Patient's Bill of Rights.
  I call on my colleagues, the Senate, and the President to recognize 
that this is an unfinished work and I look forward to working with all 
concerned so that after five long years we can finally complete this 
important measure.
  Mr. ROSS. Mr. Chairman we need a real Patients Bill of Rights--one 
that truly takes the medical decisions out of the hands of the big 
health insurance company bureaucrats and the big HMOs and puts them 
back where they belong with physicians, nurses, and patients; one that 
allows patients to hold their HMOs accountable when they make bad 
medical decisions. That's what our constituents are asking for. That's 
what the Ganske-Dingell-Berry bill would do.
  I'm sick and tired of the scare tactics the big health insurance 
companies and the big HMOs have been using with our small business 
owners. I own a small business with 15 employees back home. We provide 
health insurance to our employees. And I can tell you, the scare 
tactics that these HMOs are putting out in regard to increased premiums 
and potential lawsuits are simply that--scare tactics.
  The state of Texas has this law on the books, and it is working. It's 
making the big HMOs accountable to their patients on the front end, and 
that is why there have only been 17 lawsuits filed in the state of 
Texas--a very large state-- since the law was enacted in 1997.
  The Norwood Compromise overrides states like Texas who already have 
patient protection laws on their books. It rolls back patient 
protections and shields HMOs from the consequences of their own bad 
medical decisions, unlike doctors and hospitals, who will be left to 
defend themselves.
  This is not a patient bill of rights. This is an HMO and health 
insurance companies' bill of rights. Mr. Chairman, I urge my colleagues 
to reject this legislation written by the big HMOs for the big HMOs. I 
urge my colleagues to vote against final passage of this measure.
  Mr. UDALL of Colorado. Mr. Chairman, since being elected to Congress, 
I have worked hard for a meaningful Patient's Bill of Rights. But I 
cannot support the White House proposal that was crafted in the wee 
hours of the night because it favors HMOs over patients.
  This proposal is bad for Colorado. Patients will not have the full 
right to sue their HMO if it unfairly denies them access to critical 
medical care. And worse yet, the White House proposal overrides strong 
patients' rights laws already enacted in Colorado. When I served in the 
Colorado State House, we put in lots of hard work on a bipartisan basis 
to enact strong, meaningful patient protections. This deal will wipe 
away those protections with one fell swoop. We should keep our strong 
state protections in tact and not let the weaker federal laws take 
precedence.
  So Mr. Chairman, I stand with the American Medical Association and 
the millions of Americans who will be greatly harmed by this 
legislation. I am disappointed that the Republican Leadership has 
worked with the White House to strike a deal that is acceptable to the 
President and unacceptable to patients and doctors. They have hijacked 
a good bill and filled it with protections for special interests. I 
hope that the House-Senate conference committee will come up with a 
bill that reflects the McCain bill that was approved in the Senate 
earlier this year.
  Ms. LEE. Mr. Chairman, I am deeply disappointed in how the 
Republicans have stripped and completely weakened H.R. 2563, the 
Bipartisan Ganske-Dingell Patient Protection Act of 2001. This Patient 
Bill of Rights originally included strong patient protections that 
would have ensured timely access to high quality health care for the 
millions of Americans with private health insurance.
  This bill was a bipartisan effort to protect our patients but some 
Republicans decided to add some terrible provisions that protected HMOs 
over individuals. The original Patients Bill of Rights, the one I 
supported, would have given individuals more access to emergency 
medical services, access to specialty care, access to essential 
medication, access to clinical trials, and direct access to 
pediatricians as well as Ob-Gyn care. This bill would have also 
protected the doctor-patient relationships by ensuring health 
professionals are free to provide information about a patient's medical 
treatment options.
  H.R. 2563 did address the importance of allowing patients to appeal 
their health plans' decision as well as holding HMOs accountable for 
their actions. This bill would have established an independent, speedy 
external review process for patients dissatisfied with the results of 
the internal review. H.R. 2563 would

[[Page H5222]]

have allowed individuals the right to sue when a medical judgment 
resulted in injury or death.
  The Republicans offered three amendments of which two passed to the 
Patient Protection Act that severely weakened major provisions. The 
first amendment fully expands medical savings accounts (MSA) which only 
benefit wealthier and healthier people. This provision will directly 
increase health care costs for those who remain in traditional 
insurance and managed care plans.
  The second Republican amendment weakens enforcement provisions found 
within H.R. 2563, makes it nearly impossible to pursue cases in state 
court, and stacks the deck against patients who have been harmed by 
insurance companies.
  Now that these two poisonous amendments have been attached to H.R. 
2563, I can no longer support this bill because patients will no longer 
be protected. Individuals throughout our nation have been growing more 
and more frustrated with an inadequate health care system that does not 
listen to the needs of our people. The original bill would have 
provided many protections that are essential to upholding our patients' 
rights. But unfortunately, the bill was completely stripped by the 
Republicans who want to protect HMO insurance groups over average 
Americans.
  I was a stronger supporter of this bill but I now have to vote 
against this proposal. It's a shame that we cannot pass a real 
patients' bill of rights, and it's a shame that we are not addressing 
the 44 million individuals without any kind of health care coverage. I 
believe we need to provide all individuals access to affordable health 
care in order to improve our overall quality of life and health. This 
Congress should support a real Patients' bill of Rights and quality 
health care for everyone in this country. Today, this Congress did 
neither.
  Mr. BACA. Mr. Chairman, we are about to engage in a battle to protect 
patients' rights, our rights and the rights of our loved ones. I 
believe that every American, those in the 42nd district of California, 
those across the Nation are all entitled to quality health care.
  We can no longer take for granted that HMOs will let doctors base 
decisions on our health needs. We can no longer assume that HMOs care 
about our health concerns over the companies' bottom line.
  The bottom line is that HMOs care only about one thing: Profits! 
Profits! Profits! Profits! instead of health needs! health needs! 
health needs! health needs!
  Too often today, HMOs are not making sound decisions about the health 
needs of our families, our children, our parents and grandparents!
  We must shift priorities away from money and back to the patient! 
Away from HMOS and back to our doctors!
  This debate is about taking care of the American people that invest 
in our country every day! It is about working mothers in San Bernardino 
with sick children at home. It is about a husband or wife in Rialto 
having to take time off work to see a doctor only to be referred to 
another doctor.
  This is about direct access for women to see an ob-gyn, for your 
child to see a pediatrician, to emergency care specialists, this is a 
matter of life or death!
  Let's not forget about those who have dedicated their lives to our 
health and happiness, our parents, our grandparents, the elderly.
  This can no longer be about profits! This is about healing the sick! 
This is about making sure that the health needs of every American are 
taken care of.
  Health care should be the least of our worries! You shouldn't have to 
worry about losing your job, you shouldn't have to worry about losing 
your home because your health plan wouldn't cover you in your time of 
need!
  This is America. We care about everyone in America. We should not 
have to live in fear. The American people should not live in fear of 
sickness, the American people do not deserve to fear needing medical 
attention!
  The least we can do is guarantee better health care for working 
Americans than the health care provided to those in our prison systems!
  That is why I joined a bipartisan coalition, to co-sponsor H.R. 2563, 
the Patient Protection Act, a strong, enforceable patients' bill of 
rights, the only real patients' bill of rights. I will fight against 
efforts to weaken this bill with amendments negotiated in the dead of 
night.
  President Bush claims he is committed to working on a bipartisan 
basis for the good of our people. Here is his chance! This is not a 
partisan issue, it is about protecting patients' rights to quality 
health care. It is really about the health of our country! ``Read my 
lips'' were his Dad's famous words. I urge the president to cut the 
lipservice, prove your commitment to bipartisanship! Commit to 
America's health Mr. President, not to the health of HMOs, not to the 
health of your friends in big business!
  This patients' bill of rights is the medicine to cure the out-of-
control greed of the HMOs. I urge you to hold HMOs accountable, to 
fight for patients' rights!
  Remember who we are talking about. We are talking about the health of 
our children, our parents and our neighbors. I urge you to vote for the 
Patient Protection Act, H.R. 2563, without amendments that weaken 
patient protection.
  The CHAIRMAN. All time for general debate has expired.
  Pursuant to the rule, the bill is considered read for amendment under 
the 5-minute rule.
  The text of H.R. 2563 is as follows:

                               H.R. 2563

       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''.
       (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.
Sec. 105. Health care consumer assistance fund.

                       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.

         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. Treatment of excepted benefits.
Sec. 155. Regulations.
Sec. 156. Incorporation into plan or coverage documents.
Sec. 157. Preservation of protections.

 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.
Sec. 203. Cooperation between Federal and State authorities.

   TITLE III--APPLICATION OF PATIENT PROTECTION STANDARDS TO FEDERAL 
                       HEALTH INSURANCE PROGRAMS

Sec. 301. Application of patient protection standards to Federal health 
              insurance programs.

TITLE IV--AMENDMENTS TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 
                                  1974

Sec. 401. Application of patient protection standards to group health 
              plans and group health insurance coverage under the 
              Employee Retirement Income Security Act of 1974.
Sec. 402. Availability of civil remedies.
Sec. 403. Limitation on certain class action litigation.
Sec. 404. Limitations on actions.
Sec. 405. Cooperation between Federal and State authorities.
Sec. 406. Sense of the Senate concerning the importance of certain 
              unpaid services.

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

        Subtitle A--Application of Patient Protection Provisions

Sec. 501. Application of requirements to group health plans under the 
              Internal Revenue Code of 1986.
Sec. 502. Conforming enforcement for women's health and cancer rights.

         Subtitle B--Health Care Coverage Access Tax Incentives

Sec. 511. Expanded availability of Archer MSAs.

[[Page H5223]]

Sec. 512. Deduction for 100 percent of health insurance costs of self-
              employed individuals.
Sec. 513. Credit for health insurance expenses of small businesses.
Sec. 514. Certain grants by private foundations to qualified health 
              benefit purchasing coalitions.
Sec. 515. State grant program for market innovation.

       TITLE VI--EFFECTIVE DATES; COORDINATION IN IMPLEMENTATION

Sec. 601. Effective dates.
Sec. 602. Coordination in implementation.
Sec. 603. Severability.

                  TITLE VII--MISCELLANEOUS PROVISIONS

Sec. 701. No impact on Social Security Trust Fund.
Sec. 702. Customs user fees.
Sec. 703. Fiscal year 2002 medicare payments.
Sec. 704. Sense of Senate with respect to participation in clinical 
              trials and access to specialty care.
Sec. 705. Sense of the Senate regarding fair review process.
Sec. 706. Annual review.
Sec. 707. Definition of born-alive infant.

                    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, and a 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 claim 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, and a 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 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, and a 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

[[Page H5224]]

     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, and 
     a 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 
     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, and a 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.--Except as provided in this paragraph or 
     paragraph (4), a group health plan, and a 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, and a 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) 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

[[Page H5225]]

     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, and 
     a health insurance issuer offering health insurance coverage, 
     shall make a retrospective determination on an appeal of a 
     denial 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) Peer review of medical decisions by health care 
     professionals.--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--
       (A) shall be made by a physician (allopathic or 
     osteopathic); or
       (B) in a claim for benefits provided by a non-physician 
     health professional, shall be made by reviewer (or reviewers) 
     including at least one practicing non-physician health 
     professional of the same or similar specialty;

     with appropriate expertise (including, in the case of a 
     child, appropriate pediatric expertise) and acting within the 
     appropriate scope of practice within the State in which the 
     service is provided or rendered, 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 
     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, or 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 for 
     such review 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 a 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 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.--

[[Page H5226]]

       (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 a 
     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 investigational 
     nature, or the evaluation of the medical facts, of the item, 
     service, or condition involved 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)). 
     Notwithstanding any other provision of this Act, any 
     exclusion of an exact medical procedure, any exact time limit 
     on the duration or frequency of coverage, and any exact 
     dollar limit on the amount of coverage that is specifically 
     enumerated and defined (in the plain language of the plan or 
     coverage documents) under the plan or coverage offered by a 
     group health plan or health insurance issuer offering health 
     insurance coverage and that is disclosed under section 
     121(b)(1) shall be considered to govern the scope of the 
     benefits that may be required: Provided, That the terms and 
     conditions of the plan or coverage relating to such an 
     exclusion or limit are in compliance with the requirements of 
     law.
       (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 section, 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 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 clause 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.
       (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

[[Page H5227]]

     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 a 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 of 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, acting within the appropriate 
     scope of practice within the State in which the service is 
     provided or rendered, typically treats the condition, 
     makes the diagnosis, or provides the type of treatment 
     under review; or
       (ii) by a non-physician health care professional, a 
     reviewer (or reviewers) shall include at least one practicing 
     non-physician health care professional of the same or similar 
     specialty as the non-physician health

[[Page H5228]]

     care professional who, acting within the appropriate scope of 
     practice within the State in which the service is provided or 
     rendered, typically treats the condition, makes the 
     diagnosis, or provides the type of treatment under review.
       (B) Practicing defined.--For purposes of this paragraph, 
     the term ``practicing'' means, with respect to an individual 
     who is a physician or other health care professional that the 
     individual provides health care services to individual 
     patients on average at least 2 days per week.
       (5) Pediatric expertise.--In the case of an external review 
     relating to a child, a reviewer shall have expertise under 
     paragraph (2) in pediatrics.
       (6) Limitations on reviewer compensation.--Compensation 
     provided by 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 of 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) Compliance with the requirement of subsection (d)(1) 
     that only medically reviewable decisions shall be the subject 
     of independent medical review and with the requirement of 
     subsection (d)(3) that independent medical reviewers may not 
     require coverage for specifically excluded benefits.

       (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. The Secretary, or organization, shall 
     revoke a certification or deny a recertification with respect 
     to an entity if there is a showing that the entity has

[[Page H5229]]

     a pattern or practice of ordering coverage for benefits that 
     are specifically excluded under the plan or coverage.
       (vii) Petition for denial or withdrawal.--An individual may 
     petition the Secretary, or an organization providing the 
     certification involves, for a denial of recertification or a 
     withdrawal of a certification with respect to an entity under 
     this subparagraph if there is a pattern or practice of such 
     entity failing to meet a requirement of this section.
       (viii) 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 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.
       (5) Report.--Not later than 12 months after the general 
     effective date referred to in section 601, the General 
     Accounting Office shall prepare and submit to the appropriate 
     committees of Congress a report concerning--
       (A) the information that is provided under paragraph 
     (3)(D);
       (B) the number of denials that have been upheld by 
     independent medical reviewers and the number of denials that 
     have been reversed by such reviewers; and
       (C) the extent to which independent medical reviewers are 
     requiring coverage for benefits that are specifically 
     excluded under the plan or coverage.

     SEC. 105. HEALTH CARE CONSUMER ASSISTANCE FUND.

       (a) Grants.--
       (1) In general.--The Secretary of Health and Human Services 
     (referred to in this section as the ``Secretary'') shall 
     establish a fund, to be known as the ``Health Care Consumer 
     Assistance Fund'', to be used to award grants to eligible 
     States to carry out consumer assistance activities (including 
     programs established by States prior to the enactment of this 
     Act) designed to provide information, assistance, and 
     referrals to consumers of health insurance products.
       (2) State eligibility.--To be eligible to receive a grant 
     under this subsection a State shall prepare and submit to the 
     Secretary an application at such time, in such manner, and 
     containing such information as the Secretary may require, 
     including a State plan that describes--
       (A) the manner in which the State will ensure that the 
     health care consumer assistance office (established under 
     paragraph (4)) will educate and assist health care consumers 
     in accessing needed care;
       (B) the manner in which the State will coordinate and 
     distinguish the services provided by the health care consumer 
     assistance office with the services provided by Federal, 
     State and local health-related ombudsman, information, 
     protection and advocacy, insurance, and fraud and abuse 
     programs;
       (C) the manner in which the State will provide information, 
     outreach, and services to underserved, minority populations 
     with limited English proficiency and populations residing in 
     rural areas;
       (D) the manner in which the State will oversee the health 
     care consumer assistance office, its activities, product 
     materials and evaluate program effectiveness;
       (E) the manner in which the State will ensure that funds 
     made available under this section will be used to supplement, 
     and not supplant, any other Federal, State, or local funds 
     expended to provide services for programs described under 
     this section and those described in subparagraphs (C) and 
     (D);
       (F) the manner in which the State will ensure that health 
     care consumer office personnel have the professional 
     background and training to carry out the activities of the 
     office; and
       (G) the manner in which the State will ensure that 
     consumers have direct access to consumer assistance personnel 
     during regular business hours.
       (3) Amount of grant.--
       (A) In general.--From amounts appropriated under subsection 
     (b) for a fiscal year, the Secretary shall award a grant to a 
     State in an amount that bears the same ratio to such amounts 
     as the number of individuals within the State covered under a 
     group health plan or under health insurance coverage offered 
     by a health insurance issuer bears to the total number of 
     individuals so covered in all States (as determined by the 
     Secretary). Any amounts provided to a State under this 
     subsection that are not used by the State shall be remitted 
     to the Secretary and reallocated in accordance with this 
     subparagraph.
       (B) Minimum amount.--In no case shall the amount provided 
     to a State under a grant under this subsection for a fiscal 
     year be less than an amount equal to 0.5 percent of the 
     amount appropriated for such fiscal year to carry out this 
     section.
       (C) Non-federal contributions.--A State will provide for 
     the collection of non-Federal contributions for the operation 
     of the office in an amount that is not less than 25 percent 
     of the amount of Federal funds provided to the State under 
     this section.
       (4) Provision of funds for establishment of office.--
       (A) In general.--From amounts provided under a grant under 
     this subsection, a State shall, directly or through a 
     contract with an independent, nonprofit entity with 
     demonstrated experience in serving the needs of health care 
     consumers, provide for the establishment and operation of a 
     State health care consumer assistance office.
       (B) Eligibility of entity.--To be eligible to enter into a 
     contract under subparagraph (A), an entity shall demonstrate 
     that it has the technical, organizational, and professional 
     capacity to deliver the services described in subsection (b) 
     to all public and private health insurance participants, 
     beneficiaries, enrollees, or prospective enrollees.
       (C) Existing state entity.--Nothing in this section shall 
     prevent the funding of an existing health care consumer 
     assistance program that otherwise meets the requirements of 
     this section.
       (b) Use of Funds.--
       (1) By state.--A State shall use amounts provided under a 
     grant awarded under this section to carry out consumer 
     assistance activities directly or by contract with an 
     independent, non-profit organization. An eligible entity may 
     use some reasonable amount of such grant to ensure the 
     adequate training of personnel carrying out such activities. 
     To receive amounts under this subsection, an eligible entity 
     shall provide consumer assistance services, including--
       (A) the operation of a toll-free telephone hotline to 
     respond to consumer requests;
       (B) the dissemination of appropriate educational materials 
     on available health insurance products and on how best to 
     access health care and the rights and responsibilities of 
     health care consumers;
       (C) the provision of education on effective methods to 
     promptly and efficiently resolve questions, problems, and 
     grievances;
       (D) the coordination of educational and outreach efforts 
     with health plans, health care providers, payers, and 
     governmental agencies;
       (E) referrals to appropriate private and public entities to 
     resolve questions, problems and grievances; and
       (F) the provision of information and assistance, including 
     acting as an authorized representative, regarding internal, 
     external, or administrative grievances or appeals procedures 
     in nonlitigative settings to appeal the denial, termination, 
     or reduction of health care services, or the refusal to pay 
     for such services, under a group health plan or health 
     insurance coverage offered by a health insurance issuer.
       (2) Confidentiality and access to information.--
       (A) State entity.--With respect to a State that directly 
     establishes a health care consumer assistance office, such 
     office shall establish and implement procedures and protocols 
     in accordance with applicable Federal and State laws.
       (B) Contract entity.--With respect to a State that, through 
     contract, establishes a

[[Page H5230]]

     health care consumer assistance office, such office shall 
     establish and implement procedures and protocols, consistent 
     with applicable Federal and State laws, to ensure the 
     confidentiality of all information shared by a participant, 
     beneficiary, enrollee, or their personal representative and 
     their health care providers, group health plans, or health 
     insurance insurers with the office and to ensure that no such 
     information is used by the office, or released or disclosed 
     to State agencies or outside persons or entities without the 
     prior written authorization (in accordance with section 
     164.508 of title 45, Code of Federal Regulations) of the 
     individual or personal representative. The office may, 
     consistent with applicable Federal and State confidentiality 
     laws, collect, use or disclose aggregate information that is 
     not individually identifiable (as defined in section 164.501 
     of title 45, Code of Federal Regulations). The office shall 
     provide a written description of the policies and procedures 
     of the office with respect to the manner in which health 
     information may be used or disclosed to carry out consumer 
     assistance activities. The office shall provide health care 
     providers, group health plans, or health insurance issuers 
     with a written authorization (in accordance with section 
     164.508 of title 45, Code of Federal Regulations) to allow 
     the office to obtain medical information relevant to the 
     matter before the office.
       (3) Availability of services.--The health care consumer 
     assistance office of a State shall not discriminate in the 
     provision of information, referrals, and services regardless 
     of the source of the individual's health insurance coverage 
     or prospective coverage, including individuals covered under 
     a group health plan or health insurance coverage offered by a 
     health insurance issuer, the medicare or medicaid programs 
     under title XVIII or XIX of the Social Security Act (42 
     U.S.C. 1395 and 1396 et seq.), or under any other Federal or 
     State health care program.
       (4) Designation of responsibilities.--
       (A) Within existing state entity.--If the health care 
     consumer assistance office of a State is located within an 
     existing State regulatory agency or office of an elected 
     State official, the State shall ensure that--
       (i) there is a separate delineation of the funding, 
     activities, and responsibilities of the office as compared to 
     the other funding, activities, and responsibilities of the 
     agency; and
       (ii) the office establishes and implements procedures and 
     protocols to ensure the confidentiality of all information 
     shared by a participant, beneficiary, or enrollee or their 
     personal representative and their health care providers, 
     group health plans, or health insurance issuers with the 
     office and to ensure that no information is disclosed to the 
     State agency or office without the written authorization of 
     the individual or their personal representative in accordance 
     with paragraph (2).
       (B) Contract entity.--In the case of an entity that enters 
     into a contract with a State under subsection (a)(3), the 
     entity shall provide assurances that the entity has no 
     conflict of interest in carrying out the activities of the 
     office and that the entity is independent of group health 
     plans, health insurance issuers, providers, payers, and 
     regulators of health care.
       (5) Subcontracts.--The health care consumer assistance 
     office of a State may carry out activities and provide 
     services through contracts entered into with 1 or more 
     nonprofit entities so long as the office can demonstrate that 
     all of the requirements of this section are complied with by 
     the office.
       (6) Term.--A contract entered into under this subsection 
     shall be for a term of 3 years.
       (c) Report.--Not later than 1 year after the Secretary 
     first awards grants under this section, and annually 
     thereafter, the Secretary shall prepare and submit to the 
     appropriate committees of Congress a report concerning the 
     activities funded under this section and the effectiveness of 
     such activities in resolving health care-related problems and 
     grievances.
       (d) Authorization of Appropriations.--There are authorized 
     to be appropriated such sums as may be necessary to carry out 
     this section.

                       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 (including physician pathology 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

[[Page H5231]]

     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 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 and a 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.--Subject to subsection (a)(1), 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, including an authorization for a standing 
     referral where appropriate; 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.--Subject to subsection (a)(1), a group 
     health plan and a 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 OBSTETRICAL AND GYNECOLOGICAL 
                   CARE.

       (a) General Rights.--
       (1) Direct access.--A group health plan, and a 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 and a 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

[[Page H5232]]

     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 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 (and 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.

[[Page H5233]]

       (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 and 
     a 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.
       (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--
       (A) approved and funded (which may include funding through 
     in-kind contributions) by one or more of the following:
       (i) the National Institutes of Health;
       (ii) a cooperative group or center of the National 
     Institutes of Health, including a qualified nongovernmental 
     research entity to which the National Cancer Institute has 
     awarded a center support grant;
       (iii) either of the following if the conditions described 
     in paragraph (2) are met--

       (I) the Department of Veterans Affairs;
       (II) the Department of Defense; or

       (B) approved by the Food and Drug Administration.
       (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 ethical 
     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(d)(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;

[[Page H5234]]

       (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) Disenrollment.--Information relating to the 
     disenrollment of a participant, beneficiary, or enrollee.
       (4) Service area.--A description of the plan or issuer's 
     service area, including the provision of any out-of-area 
     coverage.
       (5) 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.
       (6) 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.
       (7) Preauthorization requirements.--A description of the 
     requirements and procedures to be used to obtain 
     preauthorization for health services, if such 
     preauthorization is required.
       (8) 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.
       (9) Specialty care.--A description of the requirements and 
     procedures to be used by 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.
       (10) Clinical trials.--A description of 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.
       (11) 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.
       (12) 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.
       (13) 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.
       (14) Advance directives and organ donation.--A description 
     of procedures for advance directives and organ donation 
     decisions if the plan or issuer maintains such procedures.
       (15) 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.
       (16) 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.
       (17) 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.
       (18) Notice of requirements.--A description of any rights 
     of participants, beneficiaries, and enrollees that are 
     established by the Bipartisan Patient Protection Act 
     (excluding those described in paragraphs (1) through (17)) 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.
       (19) 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.
       (20) Designated decisionmakers.--A description of the 
     participants and beneficiaries with respect to whom each 
     designated decisionmaker under the plan has assumed liability 
     under section 502(o) of the Employee Retirement Income 
     Security Act of 1974 and the name and address of each such 
     decisionmaker.
       (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) Utilization review activities.--A description of 
     procedures used and requirements (including circumstances, 
     timeframes, and appeals rights) under any utilization review 
     program under sections 101 and 102, including any drug 
     formulary program under section 118.
       (5) 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 a 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

[[Page H5235]]

     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 1852(j)(4) 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.
       (b) Application.--For purposes of carrying out paragraph 
     (1), any reference in section 1852(j)(4) of the Social 
     Security Act to the Secretary, a Medicare+Choice 
     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 
     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 that is no less protective than 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 and a 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.

[[Page H5236]]

       (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 714 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.
       (2) 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.
       (3) 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.
       (4) 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.
       (5) 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.
       (6) 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.
       (7) Nonparticipating.--The term ``nonparticipating'' means, 
     with respect to a health care provider that provides health 
     care items and services to a participant, beneficiary, or 
     enrollee under group health plan or health insurance 
     coverage, a health care provider that is not a participating 
     health care provider with respect to such items and services.
       (8) 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.
       (9) 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.
       (10) 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 Compliant 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 
     substantially complies (within the meaning of subsection (c)) 
     with 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 compliant 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) Definitions.--In this section:
       (A) Patient protection requirement.--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.
       (B) Substantially compliant.--The terms ``substantially 
     compliant'', substantially complies'', or ``substantial 
     compliance'' with respect to a State law, mean that the State 
     law has the same or similar features as the patient 
     protection requirements and has a similar effect.
       (c) Determinations of Substantial Compliance.--
       (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 compliant 
     with 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 substantially 
     complies with 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 substantially 
     comply with 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.
       (C) Deference to states.--With respect to a certification 
     submitted under paragraph (1), the Secretary shall give 
     deference to the State's interpretation of the State law 
     involved with respect to the patient protection involved.
       (D) Public notification.--The Secretary shall--
       (i) provide a State with a notice of the determination to 
     approve or disapprove a certification under this paragraph;
       (ii) promptly publish in the Federal Register a notice that 
     a State has submitted a certification under paragraph (1);
       (iii) promptly publish in the Federal Register the notice 
     described in clause (i) with respect to the State; and
       (iv) annually publish the status of all States with respect 
     to certifications.
       (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 
     compliance.
       (5) Petitions.--
       (A) Petition process.--Effective on the date on which the 
     provisions of this Act become effective, as provided for in 
     section 601, a group health plan, health insurance issuer, 
     participant, beneficiary, or enrollee may submit a petition 
     to the Secretary for an advisory opinion as to whether or not 
     a standard or requirement under a State law applicable to the 
     plan, issuer, participant, beneficiary, or enrollee that is 
     not the subject of a certification under this subsection, is 
     superseded under subsection (a)(1) because such standard or 
     requirement prevents the application of a requirement of this 
     title.

[[Page H5237]]

       (B) Opinion.--The Secretary shall issue an advisory opinion 
     with respect to a petition submitted under subparagraph (A) 
     within the 60-day period beginning on the date on which such 
     petition is submitted.
       (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. TREATMENT OF EXCEPTED BENEFITS.

       (a) In General.--The requirements of this title and the 
     provisions of sections 502(a)(1)(C), 502(n), and 514(d) of 
     the Employee Retirement Income Security Act of 1974 (added by 
     section 402) shall not apply to excepted benefits (as defined 
     in section 733(c) of such Act), other than benefits described 
     in section 733(c)(2)(A) of such Act, in the same manner as 
     the provisions of part 7 of subtitle B of title I of such Act 
     do not apply to such benefits under subsections (b) and (c) 
     of section 732 of such Act.
       (b) Coverage of Certain Limited Scope Plans.--Only for 
     purposes of applying the requirements of this title under 
     sections 2707 and 2753 of the Public Health Service Act, 
     section 714 of the Employee Retirement Income Security Act of 
     1974, and section 9813 of the Internal Revenue Code of 1986, 
     the following sections shall be deemed not to apply:
       (1) Section 2791(c)(2)(A) of the Public Health Service Act.
       (2) Section 733(c)(2)(A) of the Employee Retirement Income 
     Security Act of 1974.
       (3) Section 9832(c)(2)(A) of the Internal Revenue Code of 
     1986.

     SEC. 155. REGULATIONS.

       The Secretaries of Health and Human Services, Labor, and 
     the Treasury shall issue such regulations as may be necessary 
     or appropriate to carry out this 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, subject to 
     section 154, 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.

     SEC. 157. PRESERVATION OF PROTECTIONS.

       (a) In General.--The rights under this Act (including the 
     right to maintain a civil action and any other rights under 
     the amendments made by this Act) may not be waived, deferred, 
     or lost pursuant to any agreement not authorized under this 
     Act.
       (b) Exception.--Subsection (a) shall not apply to an 
     agreement providing for arbitration or participation in any 
     other nonjudicial procedure to resolve a dispute if the 
     agreement is entered into knowingly and voluntarily by the 
     parties involved after the dispute has arisen or is pursuant 
     to the terms of a collective bargaining agreement. Nothing in 
     this subsection shall be construed to permit the waiver of 
     the requirements of sections 103 and 104 (relating to 
     internal and external review).

 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, 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 with respect to individual health 
     insurance coverage it offers, and such requirements shall be 
     deemed to be incorporated into this subsection.''.

     SEC. 203. COOPERATION BETWEEN FEDERAL AND STATE AUTHORITIES.

       Part C of title XXVII of the Public Health Service Act (42 
     U.S.C. 300gg-91 et seq.) is amended by adding at the end the 
     following:

     ``SEC. 2793. COOPERATION BETWEEN FEDERAL AND STATE 
                   AUTHORITIES.

       ``(a) Agreement with States.--A State may enter into an 
     agreement with the Secretary for the delegation to the State 
     of some or all of the Secretary's authority under this title 
     to enforce the requirements applicable under title I of the 
     Bipartisan Patient Protection Act 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.
       ``(b) Delegations.--Any department, agency, or 
     instrumentality of a State to which authority is delegated 
     pursuant to an agreement entered into under this section may, 
     if authorized under State law and to the extent consistent 
     with such agreement, exercise the powers of the Secretary 
     under this title which relate to such authority.''.

   TITLE III--APPLICATION OF PATIENT PROTECTION STANDARDS TO FEDERAL 
                       HEALTH INSURANCE PROGRAMS

     SEC. 301. APPLICATION OF PATIENT PROTECTION STANDARDS TO 
                   FEDERAL HEALTH INSURANCE PROGRAMS.

       (a) Sense of Congress.--It is the sense of Congress that 
     enrollees in Federal health insurance programs should have 
     the same rights and privileges as those afforded under title 
     I and under the amendments made by title IV to participants 
     and beneficiaries under group health plans.
       (b) Conforming Federal Health Insurance Programs.--It is 
     the sense of Congress that the President should require, by 
     executive order, the Federal official with authority over 
     each Federal health insurance program, to the extent 
     feasible, to take such steps as are necessary to implement 
     the rights and privileges described in subsection (a) with 
     respect to such program.
       (c) GAO Report on Additional Steps Required.--Not later 
     than 1 year after the date of the enactment of this Act, the 
     Comptroller General of the United States shall submit to 
     Congress a report on statutory changes that are required to 
     implement such rights and privileges in a manner that is 
     consistent with the missions of the Federal health insurance 
     programs and that avoids unnecessary duplication or 
     disruption of such programs.
       (d) Federal Health Insurance Program.--In this section, the 
     term ``Federal health insurance program'' means a Federal 
     program that provides creditable coverage (as defined in 
     section 2701(c)(1) of the Public Health Service Act) and 
     includes a health program of the Department of Veterans 
     Affairs.

TITLE IV--AMENDMENTS TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 
                                  1974

     SEC. 401. 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 (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.--

[[Page H5238]]

       ``(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 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, 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, 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 compliant state laws.--For 
     purposes of applying this subsection in connection with 
     health insurance coverage, any reference in this subsection 
     to a requirement in a section or other provision in the 
     Bipartisan Patient Protection Act with respect to a health 
     insurance issuer is deemed to include a reference to a 
     requirement under a State law that substantially complies (as 
     determined under section 152(c) of such Act) with 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, 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 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 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, 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. 402. 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 subsections:
       ``(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, upon consideration of a claim for benefits of a 
     participant or beneficiary under section 102 of the 
     Bipartisan Patient Protection Act (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--
       ``(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, and
       ``(B) such failure is a proximate cause of personal injury 
     to, or the death of, the participant or beneficiary,

     such plan, plan sponsor, or issuer 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 
     paragraph (1)(A) does not include a medically reviewable 
     decision.
       ``(B) Medically reviewable decision.--For purposes of this 
     subsection, 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 (relating to medically reviewable decisions).
       ``(3) Limitation regarding certain types of actions saved 
     from preemption of state law.--A cause of action is not 
     established under paragraph (1)(A) in connection with a 
     failure described in paragraph (1)(A) to the extent that a 
     cause of action under State law (as defined in section 
     514(c)) for such failure would not be preempted under section 
     514.
       ``(4) Definitions and related rules.--For purposes of this 
     subsection.--
       ``(A) Ordinary care.--The term `ordinary care' means, with 
     respect to a determination on a claim for benefits, that 
     degree of care, skill, and diligence that a reasonable and

[[Page H5239]]

     prudent individual would exercise in making a fair 
     determination on a claim for benefits of like kind to the 
     claims involved.
       ``(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.
       ``(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.
       ``(E) Treatment of excepted benefits.--Under section 154(a) 
     of the Bipartisan Patient Protection Act, the provisions of 
     this subsection and subsection (a)(1)(C) do not apply to 
     certain excepted benefits.
       ``(5) 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) under 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 upon consideration 
     of a claim for benefits or under section 103 of such Act upon 
     review of a denial of a claim for benefits.
       ``(C) Direct participation.--
       ``(i) In general.--For purposes of subparagraph (B), the 
     term `direct participation' means, in connection with a 
     decision described in paragraph (1)(A), the actual making of 
     such decision or the actual exercise of control in making 
     such decision.
       ``(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 
     paragraph (1)(A) on a particular claim for benefits of a 
     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.

       ``(iii) 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).

       ``(D) Application to certain plans.--
       ``(i) In general.--Notwithstanding any other provision of 
     this subsection, no group health plan described in clause 
     (ii) (or plan sponsor of such a plan) shall be liable under 
     paragraph (1) for the performance of, or the failure to 
     perform, any non-medically reviewable duty under the plan.
       ``(ii) Definition.--A group health plan described in this 
     clause is--

       ``(I) a group health plan that is self-insured and self 
     administered by an employer (including an employee of such an 
     employer acting within the scope of employment); or
       ``(II) a multiemployer plan as defined in section 3(37)(A) 
     (including an employee of a contributing employer or of the 
     plan, or a fiduciary of the plan, acting within the scope of 
     employment or fiduciary responsibility) that is self-
     insured and self-administered.
       ``(6) Exclusion of physicians and other health care 
     professionals.--
       ``(A) In general.--No treating physician or other treating 
     health care professional of the participant or beneficiary, 
     and no person acting under the direction of such a physician 
     or health care professional, shall be liable under paragraph 
     (1) for the performance of, or the failure to perform, any 
     non-medically reviewable duty of the plan, the plan sponsor, 
     or any health insurance issuer offering health insurance 
     coverage in connection with the plan.
       ``(B) Definitions.--For purposes of subparagraph (A)--
       ``(i) 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.
       ``(ii) Non-medically reviewable duty.--The term `non-
     medically reviewable duty' means a duty the discharge of 
     which does not include the making of a medically reviewable 
     decision.
       ``(7) Exclusion of hospitals.--No treating hospital of the 
     participant or beneficiary shall be liable under paragraph 
     (1) for the performance of, or the failure to perform, any 
     non-medically reviewable duty (as defined in paragraph 
     (6)(B)(ii)) of the plan, the plan sponsor, or any health 
     insurance issuer offering health insurance coverage in 
     connection with the plan.
       ``(8) Rule of construction relating to exclusion from 
     liability of physicians, health care professionals, and 
     hospitals.--Nothing in paragraph (6) or (7) shall be 
     construed to limit the liability (whether direct or 
     vicarious) of the plan, the plan sponsor, or any health 
     insurance issuer offering health insurance coverage in 
     connection with the plan.
       ``(9) Requirement of exhaustion.--
       ``(A) In general.--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 (if applicable) have been exhausted.
       ``(B) Exception for needed care.--A participant or 
     beneficiary may seek relief exclusively in Federal court 
     under subsection 502(a)(1)(B) prior to the exhaustion of 
     administrative remedies under sections 102, 103, or 104 of 
     the Bipartisan Patient Protection Act (as required under 
     subparagraph (A)) if it is demonstrated to the court that the 
     exhaustion of such remedies would cause irreparable harm to 
     the health of the participant or beneficiary. Notwithstanding 
     the awarding of relief under subsection 502(a)(1)(B) pursuant 
     to this subparagraph, no relief shall be available as a 
     result of, or arising under, paragraph (1)(A) or paragraph 
     (10)(B), with respect to a participant or beneficiary, unless 
     the requirements of subparagraph (A) are met.
       ``(C) 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.
       ``(D) Admissible.--Any determination made by a reviewer in 
     an administrative proceeding under section 103 of the 
     Bipartisan Patient Protection Act shall be admissible in any 
     Federal court proceeding and shall be presented to the trier 
     of fact.
       ``(10) 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.
       ``(11) Limitation on attorneys' fees.--
       ``(A) In general.--Notwithstanding any other provision of 
     law, or any arrangement, agreement, or contract regarding an 
     attorney's fee, the amount of an attorney's contingency fee 
     allowable for a cause of action brought pursuant to this 
     subsection shall not exceed \1/3\ of the total amount of the 
     plaintiff's recovery (not including the reimbursement of 
     actual out-of-pocket expenses of the attorney).
       ``(B) Determination by district court.--The last Federal 
     district court in which the action was pending upon the final 
     disposition, including all appeals, of the action shall have 
     jurisdiction to review the attorney's fee to ensure that the 
     fee is a reasonable one.

[[Page H5240]]

       ``(12) 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 
     (9) are first met.
       ``(13) 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.
       ``(14) 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.
       ``(15) 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 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.
       ``(16) Exclusion of health insurance agents.--Paragraph (1) 
     does not apply with respect to a person whose sole 
     involvement with the group health plan is providing advice or 
     administrative services to the employer or other plan sponsor 
     relating to the selection of health insurance coverage 
     offered in connection with the plan.
       ``(17) 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.
       ``(18) Relief from liability for employer or other plan 
     sponsor by means of designated decisionmaker.--
       ``(A) In general.--Notwithstanding the direct participation 
     (as defined in paragraph (5)(C)(i)) of an employer or plan 
     sponsor, in any case in which there is (or is deemed under 
     subparagraph (B) to be) a designated decisionmaker under 
     subparagraph (B) that meets the requirements of subsection 
     (o)(1) for an employer or other plan sponsor--
       ``(i) all liability of such employer or plan sponsor 
     involved (and any employee of such employer or sponsor acting 
     within the scope of employment) under this subsection in 
     connection with any participant or beneficiary shall be 
     transferred to, and assumed by, the designated decisionmaker, 
     and
       ``(ii) with respect to such liability, the designated 
     decisionmaker shall be substituted for the employer or 
     sponsor (or employee) in the action and may not raise any 
     defense that the employer or sponsor (or employee) could not 
     raise if such a decisionmaker were not so deemed.
       ``(B) Automatic designation.--A health insurance issuer 
     shall be deemed to be a designated decisionmaker for purposes 
     of subparagraph (A) with respect to the participants and 
     beneficiaries of an employer or plan sponsor, whether or not 
     the employer or plan sponsor makes such a designation, and 
     shall be deemed to have assumed unconditionally all liability 
     of the employer or plan sponsor under such designation in 
     accordance with subsection (o), unless the employer or plan 
     sponsor affirmatively enters into a contract to prevent the 
     service of the designated decisionmaker.
       ``(C) Treatment of certain trust funds.--For purposes of 
     this paragraph, the terms `employer' and `plan sponsor', in 
     connection with the assumption by a designated decisionmaker 
     of the liability of employer or other plan sponsor pursuant 
     to this paragraph, shall be construed to include a trust fund 
     maintained pursuant to section 302 of the Labor Management 
     Relations Act, 1947 (29 U.S.C. 186) or the Railway Labor Act 
     (45 U.S.C. 151 et seq.).
       ``(19) Previously provided services.--
       ``(A) in general.--Except as provided in this paragraph, a 
     cause of action shall not arise under paragraph (1) where the 
     denial involved relates to an item or service that has 
     already been fully provided to the participant or beneficiary 
     under the plan or coverage and the claim relates solely to 
     the subsequent denial of payment for the provision of such 
     item or service.
       ``(B) Exception.--Nothing in subparagraph (A) shall be 
     construed to--
       ``(i) prohibit a cause of action under paragraph (1) where 
     the nonpayment involved results in the participant or 
     beneficiary being unable to receive further items or services 
     that are directly related to the item or service involved in 
     the denial referred to in subparagraph (A) or that are part 
     of a continuing treatment or series of procedures; or
       ``(ii) limit liability that otherwise would arise from the 
     provision of the item or services or the performance of a 
     medical procedure.
       ``(20) Exemption from personal liability for individual 
     members of boards of directors, joint boards of trustees, 
     etc.--Any individual who is--
       ``(A) a member of a board of directors of an employer or 
     plan sponsor; or
       ``(B) a member of an association, committee, employee 
     organization, joint board of trustees, or other similar group 
     of representatives of the entities that are the plan sponsor 
     of plan maintained by two or more employers and one or more 
     employee organizations;

     shall not be personally liable under this subsection for 
     conduct that is within the scope of employment or of plan-
     related duties of the individuals unless the individual acts 
     in a fraudulent manner for personal enrichment.
       ``(o) Requirements for Designated Decisionmakers of Group 
     Health Plans.--
       ``(1) In general.--For purposes of subsection (n)(18) and 
     section 514(d)(9), a designated decisionmaker meets the 
     requirements of this paragraph with respect to any 
     participant or beneficiary if--
       ``(A) such designation is in such form as may be prescribed 
     in regulations of the Secretary,
       ``(B) the designated decisionmaker--
       ``(i) meets the requirements of paragraph (2),
       ``(ii) assumes unconditionally all liability of the 
     employer or plan sponsor involved (and any employee of such 
     employer or sponsor acting within the scope of employment) 
     either arising under subsection (n) or arising in a cause of 
     action permitted under section 514(d) in connection with 
     actions (and failures to act) of the employer or plan sponsor 
     (or employee) occurring during the period in which the 
     designation under subsection (n)(18) or section 514(d)(9) is 
     in effect relating to such participant and beneficiary,
       ``(iii) agrees to be substituted for the employer or plan 
     sponsor (or employee) in the action and not to raise any 
     defense with respect to such liability that the employer or 
     plan sponsor (or employee) may not raise, and
       ``(iv) where paragraph (2)(B) applies, assumes 
     unconditionally the exclusive authority under the group 
     health plan to make medically reviewable decisions under the 
     plan with respect to such participant or beneficiary, and
       ``(C) the designated decisionmaker and the participants and 
     beneficiaries for whom the decisionmaker has assumed 
     liability are identified in the written instrument required 
     under section 402(a) and as required under section 121(b)(19) 
     of the Bipartisan Patient Protection Act.

     Any liability assumed by a designated decisionmaker pursuant 
     to this subsection shall be in addition to any liability that 
     it may otherwise have under applicable law.
       ``(2) Qualifications for designated decisionmakers.--
       ``(A) In general.--Subject to subparagraph (B), an entity 
     is qualified under this paragraph to serve as a designated 
     decisionmaker with respect to a group health plan if the 
     entity has the ability to assume the liability described in 
     paragraph (1) with respect to participants and beneficiaries 
     under such plan, including requirements relating to the 
     financial obligation for timely satisfying the assumed 
     liability, and maintains with the plan sponsor and the 
     Secretary certification of such ability. Such 
     certification shall be provided to the plan sponsor or 
     named fiduciary and to the Secretary upon designation 
     under subsection (n)(18)(B) or section 517(d)(9)(B) and 
     not less frequently than annually thereafter, or if such 
     designation constitutes a multiyear arrangement, in 
     conjunction with the renewal of the arrangement.
       ``(B) Special qualification in the case of certain 
     reviewable decisions.--In the case of a group health plan 
     that provides benefits consisting of medical care to a 
     participant or beneficiary only through health insurance 
     coverage offered by a single health insurance issue, such 
     issuer is the only entity that may be qualified under this 
     paragraph to serve as a designated decisionmaker with respect 
     to such participant or beneficiary, and shall serve as the 
     designated decisionmaker unless the employer or other plan 
     sponsor acts affirmatively to prevent such service.
       ``(3) Requirements relating to financial obligations.--For 
     purposes of paragraph (2)(A), the requirements relating to 
     the financial obligation of an entity for liability shall 
     include--
       ``(A) coverage of such entity under an insurance policy or 
     other arrangement, secured and maintained by such entity, to 
     effectively insure such entity against losses arising from 
     professional liability claims, including those arising from 
     its service as a designated decisionmaker under this part; or
       ``(B) evidence of minimum capital and surplus levels that 
     are maintained by such entity to cover any losses as a result 
     of liability arising from its service as a designated 
     decisionmaker under this part.


[[Page H5241]]


     The appropriate amounts of liability insurance and minimum 
     capital and surplus levels for purposes of subparagraphs (A) 
     and (B) shall be determined by an actuary using sound 
     actuarial principles and accounting practices pursuant to 
     established guidelines of the American Academy of Actuaries 
     and in accordance with such regulations as the Secretary may 
     prescribe and shall be maintained throughout the term for 
     which the designation is in effect. The provisions of this 
     paragraph shall not apply in the case of a designated 
     decisionmaker that is a group health plan, plan sponsor, or 
     health insurance issuer and that is regulated under Federal 
     law or a State financial solvency law.
       ``(4) Limitation on appointment of treating physicians.--A 
     treating physician who directly delivered the care, 
     treatment, or provided the patient service that is the 
     subject of a cause of action by a participant or beneficiary 
     under subsection (n) or section 514(d) may not be designated 
     as a designated decisionmaker under this subsection with 
     respect to such participant or beneficiary.''.
       (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) against the 
     plan, the plan sponsor, any health insurance issuer offering 
     health insurance coverage in connection with the plan, or any 
     managed care entity in connection with the plan to recover 
     damages resulting from personal injury or for wrongful death 
     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 (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 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.
       ``(2) Definitions and related rules.--For purposes of this 
     subsection and subsection (e)--
       ``(A) Treatment of excepted benefits.--Under section 154(a) 
     of the Bipartisan Patient Protection Act, the provisions of 
     this subsection do not apply to certain excepted benefits.
       ``(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.
       ``(D) Managed care entity.--
       ``(i) In general.--The term `managed care entity' means, in 
     connection with a group health plan and subject to clause 
     (ii), any entity that is involved in determining the manner 
     in which or the extent to which items or services (or 
     reimbursement therefor) are to be provided as benefits under 
     the plan.
       ``(ii) Treatment of treating physicians, other treating 
     health care professionals, and treating hospitals.--Such term 
     does not include a treating physician or other treating 
     health care professional (as defined in section 
     502(n)(6)(B)(i)) of the participant or beneficiary and also 
     does not include a treating hospital insofar as it is acting 
     solely in the capacity of providing treatment or care to the 
     participant or beneficiary. Nothing in the preceding sentence 
     shall be construed to preempt vicarious liability of any 
     plan, plan sponsor, health insurance issuer, or managed care 
     entity.
       ``(3) 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 that is brought by 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 
     employer or other plan sponsor maintaining the plan (or 
     against an employee of such an employer or sponsor acting 
     within the scope of employment) if such cause of action 
     arises by reason of a medically reviewable decision, to the 
     extent that there was direct participation by the employer or 
     other plan sponsor (or employee) in the decision.
       ``(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), 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) on a particular claim for benefits of 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).

       ``(4) Requirement of exhaustion.--
       ``(A) In general.--Except as provided in subparagraph (D), 
     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, 103, and 104 of the Bipartisan Patient Protection Act 
     (if applicable) have been exhausted.
       ``(B) Late manifestation of injury.--
       ``(i) In general.--A participant or beneficiary shall not 
     be precluded from pursuing a review under section 104 of the 
     Bipartisan Patient Protection Act regarding an injury that 
     such participant or beneficiary has experienced if the 
     external review entity first

[[Page H5242]]

     determines that the injury of such participant or beneficiary 
     is a late manifestation of an earlier injury.
       ``(ii) Definition.--In this subparagraph, the term `late 
     manifestation of an earlier injury' means an injury sustained 
     by the participant or beneficiary which was not known, and 
     should not have been known, by such participant or 
     beneficiary by the latest date that the requirements of 
     subparagraph (A) should have been met regarding the claim for 
     benefits which was denied.
       ``(C) Exception for needed care.--A participant or 
     beneficiary may seek relief exclusively in Federal court 
     under subsection 502(a)(1)(B) prior to the exhaustion of 
     administrative remedies under sections 102, 103, or 104 of 
     the Bipartisan Patient Protection Act (as required under 
     subparagraph (A)) if it is demonstrated to the court that the 
     exhaustion of such remedies would cause irreparable harm to 
     the health of the participant or beneficiary. Notwithstanding 
     the awarding of relief under subsection 502(a)(1)(B) pursuant 
     to this subparagraph, no relief shall be available as a 
     result of, or arising under, paragraph (1)(A) unless the 
     requirements of subparagraph (A) are met.
       ``(D) Failure to review.--
       ``(i) In general.--If the external review entity fails to 
     make a determination within the time required under section 
     104(e)(1)(A)(i), a participant or beneficiary may bring an 
     action under section 514(d) after 10 additional days after 
     the date on which such time period has expired and the filing 
     of such action shall not affect the duty of the independent 
     medical reviewer (or reviewers) to make a determination 
     pursuant to section 104(e)(1)(A)(i).
       ``(ii) Expedited determination.--If the external review 
     entity fails to make a determination within the time required 
     under section 104(e)(1)(A)(ii), a participant or beneficiary 
     may bring an action under this subsection and the filing of 
     such an action shall not affect the duty of the independent 
     medical reviewer (or reviewers) to make a determination 
     pursuant to section 104(e)(1)(A)(ii).
       ``(E) 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.
       ``(F) Admissible.--Any determination made by a reviewer in 
     an administrative proceeding under section 104 of the 
     Bipartisan Patient Protection Act shall be admissible in any 
     Federal or State court proceeding and shall be presented to 
     the trier of fact.
       ``(5) 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.
       ``(6) 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 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.
       ``(7) 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, 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).
       ``(8) 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).
       ``(9) Relief from liability for employer or other plan 
     sponsor by means of designated decisionmaker.--
       ``(A) In general.--Paragraph (1) shall not apply with 
     respect to any cause of action described in paragraph (1)(A) 
     under State law insofar as such cause of action provides for 
     liability with respect to a participant or beneficiary of an 
     employer or plan sponsor (or an employee of such employer or 
     sponsor acting within the scope of employment), if with 
     respect to the employer or plan sponsor there is (or is 
     deemed under subparagraph (B) to be) a designated 
     decisionmaker that meets the requirements of section 
     502(o)(1) with respect to such participant or beneficiary. 
     Such paragraph (1) shall apply with respect to any cause of 
     action described in paragraph (1)(A) under State law against 
     the designated decisionmaker of such employer or other plan 
     sponsor with respect to the participant or beneficiary.
       ``(B) Automatic designation.--A health insurance issuer 
     shall be deemed to be a designated decisionmaker for purposes 
     of subparagraph (A) with respect to the participants and 
     beneficiaries of an employer or plan sponsor, whether or not 
     the employer or plan sponsor makes such a designation, and 
     shall be deemed to have assumed unconditionally all liability 
     of the employer or plan sponsor under such designation in 
     accordance with subsection (o), unless the employer or plan 
     sponsor affirmatively enters into a contract to prevent the 
     service of the designated decisionmaker.
       ``(C) Treatment of certain trust funds.--For purposes of 
     this paragraph, the terms `employer' and `plan sponsor', in 
     connection with the assumption by a designated decisionmaker 
     of the liability of employer or other plan sponsor pursuant 
     to this paragraph, shall be construed to include a trust fund 
     maintained pursuant to section 302 of the Labor Management 
     Relations Act, 1947 (29 U.S.C. 186) or the Railway Labor Act 
     (45 U.S.C. 151 et seq.).
       ``(10) Previously provided services.--
       ``(A) In general.--Except as provided in this paragraph, a 
     cause of action shall not arise under paragraph (1) where the 
     denial involved relates to an item or service that has 
     already been fully provided to the participant or beneficiary 
     under the plan or coverage and the claim relates solely to 
     the subsequent denial of payment for the provision of such 
     item or service.
       ``(B) Exception.--Nothing in subparagraph (A) shall be 
     construed to--
       ``(i) prohibit a cause of action under paragraph (1) where 
     the nonpayment involved results in the participant or 
     beneficiary being unable to receive further items or services 
     that are directly related to the item or service involved in 
     the denial referred to in subparagraph (A) or that are part 
     of a continuing treatment or series of procedures;
       ``(ii) prohibit a cause of action under paragraph (1) 
     relating to quality of care; or
       ``(iii) limit liability that otherwise would arise from the 
     provision of the item or services or the performance of a 
     medical procedure.
       ``(11) Exemption from personal liability for individual 
     members of boards of directors, joint boards of trustees, 
     etc.--Any individual who is--
       ``(A) a member of a board of directors of an employer or 
     plan sponsor; or
       ``(B) a member of an association, committee, employee 
     organization, joint board of trustees, or other similar group 
     of representatives of the entities that are the plan sponsor 
     of plan maintained by two or more employers and one or more 
     employee organizations;

     shall not be personally liable under this subsection for 
     conduct that is within the scope of employment or of plan-
     related duties of the individuals unless the individual acts 
     in a fraudulent manner for personal enrichment.
       ``(12) Choice of law.--A cause of action brought under 
     paragraph (1) shall be governed by the law (including choice 
     of law rules) of the State in which the plaintiff resides.
       ``(13) Limitation on attorneys' fees.--
       ``(A) In general.--Notwithstanding any other provision of 
     law, or any arrangement, agreement, or contract regarding an 
     attorney's fee, the amount of an attorney's contingency fee 
     allowable for a cause of action brought under paragraph (1) 
     shall not exceed \1/3\ of the total amount of the plaintiff's 
     recovery (not including the reimbursement of actual out-of-
     pocket expenses of the attorney).
       ``(B) Determination by court.--The last court in which the 
     action was pending upon the final disposition, including all 
     appeals, of the action may review the attorney's fee to 
     ensure that the fee is a reasonable one.
       ``(C) No preemption of state law.--Subparagraph (A) shall 
     not apply with respect to a cause of action under paragraph 
     (1) that is brought in a State that has a law or framework of 
     laws with respect to the amount of an attorney's contingency 
     fee that may be incurred for the representation of a 
     participant or beneficiary (or the estate of such participant 
     or beneficiary) who brings such a cause of action.
       ``(e) Rules of Construction Relating to Health Care.--
     Nothing in this title shall be construed as--

[[Page H5243]]

       ``(1) affecting any State law relating to the practice of 
     medicine or the provision of, or the failure to provide, 
     medical care, or affecting any action (whether the liability 
     is direct or vicarious) based upon such a State law,
       ``(2) superseding any State law permitted under section 
     152(b)(1)(A) of the Bipartisan Patient Protection Act, or
       ``(3) affecting any applicable State law with respect to 
     limitations on monetary damages.
       ``(f) No Right of Action for Recovery, Indemnity, or 
     Contribution by Issuers Against Treating Health Care 
     Professionals and Treating Hospitals.--In the case of any 
     care provided, or any treatment decision made, by the 
     treating health care professional or the treating hospital of 
     a participant or beneficiary under a group health plan which 
     consists of medical care provided under such plan, any cause 
     of action under State law against the treating health care 
     professional or the treating hospital by the plan or a health 
     insurance issuer providing health insurance coverage in 
     connection with the plan for recovery, indemnity, or 
     contribution in connection with such care (or any medically 
     reviewable decision made in connection with such care) or 
     such treatment decision is superseded.''.
       (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 applicable effective 
     under section 601.

     SEC. 403. LIMITATION ON CERTAIN CLASS ACTION LITIGATION.

       Section 502 of the Employee Retirement Income Security Act 
     of 1974 (29 U.S.C. 1132), as amended by section 402, is 
     further amended by adding at the end the following:
       ``(p) Limitation on Class Action Litigation.--
       ``(1) In general.--Any claim or cause of action that is 
     maintained under this section in connection with a group 
     health plan, or health insurance coverage issued in 
     connection with a group health plan, as a class action, 
     derivative action, or as an action on behalf of any group of 
     2 or more claimants, may be maintained only if the class, the 
     derivative claimant, or the group of claimants is limited to 
     the participants or beneficiaries of a group health plan 
     established by only 1 plan sponsor. No action maintained by 
     such class, such derivative claimant, or such group of 
     claimants may be joined in the same proceeding with any 
     action maintained by another class, derivative claimant, or 
     group of claimants or consolidated for any purpose with any 
     other proceeding. In this paragraph, the terms `group health 
     plan' and `health insurance coverage' have the meanings given 
     such terms in section 733.
       ``(2) Effective date.--This subsection shall apply to all 
     civil actions that are filed on or after January 1, 2002.''.

     SEC. 404. LIMITATIONS ON ACTIONS.

       Section 502 of the Employee Retirement Income Security Act 
     of 1974 (29 U.S.C. 1132) (as amended by section 402(a)) is 
     amended further by adding at the end the following new 
     subsection:
       ``(q) 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 (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 (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.''.

     SEC. 405. COOPERATION BETWEEN FEDERAL AND STATE AUTHORITIES.

       Subpart C of part 7 of subtitle B of title I of the 
     Employee Retirement Income Security Act of 1974 (29 U.S.C. 
     1191 et seq.) is amended by adding at the end the following 
     new section:

     ``SEC. 735. COOPERATION BETWEEN FEDERAL AND STATE 
                   AUTHORITIES.

       ``(a) Agreement with States.--A State may enter into an 
     agreement with the Secretary for the delegation to the State 
     of some or all of the Secretary's authority under this title 
     to enforce the requirements applicable under title I of the 
     Bipartisan Patient Protection Act 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.
       ``(b) Delegations.--Any department, agency, or 
     instrumentality of a State to which authority is delegated 
     pursuant to an agreement entered into under this section may, 
     if authorized under State law and to the extent consistent 
     with such agreement, exercise the powers of the Secretary 
     under this title which relate to such authority.''.

     SEC. 406. SENSE OF THE SENATE CONCERNING THE IMPORTANCE OF 
                   CERTAIN UNPAID SERVICES.

       It is the sense of the Senate that the court should 
     consider the loss of a nonwage earning spouse or parent as an 
     economic loss for the purposes of this section. Furthermore, 
     the court should define the compensation for the loss not as 
     minimum services, but, rather, in terms that fully compensate 
     for the true and whole replacement cost to the family.

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

        Subtitle A--Application of Patient Protection Provisions

     SEC. 501. 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 (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. 502. 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 501, 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.''.

         Subtitle B--Health Care Coverage Access Tax Incentives

     SEC. 511. 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''.

[[Page H5244]]

       (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. 512. 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. 513. 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 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. 514. 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,

[[Page H5245]]

     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--
       ``(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. 515. 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 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
       (C) 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.

       TITLE VI--EFFECTIVE DATES; COORDINATION IN IMPLEMENTATION

     SEC. 601. EFFECTIVE DATES.

       (a) Group Health Coverage.--
       (1) In general.--Subject to paragraph (2) and subsection 
     (d), the amendments made by sections 201(a), 401, 403, 501, 
     and 502 (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 October 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 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), 401, 403, 501, and 502 (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 (excluding any 
     extension thereof agreed to after the date of the enactment 
     of this Act); or
       (B) the general effective date;

     but shall apply not later than 1 year after 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 Act 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.

[[Page H5246]]

       (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. 602. COORDINATION IN IMPLEMENTATION.

       The Secretary of Labor and the Secretary of Health and 
     Human Services 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 
     Act (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. 603. 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.

                  TITLE VII--MISCELLANEOUS PROVISIONS

     SEC. 701. NO IMPACT ON SOCIAL SECURITY TRUST FUND.

       (a) In General.--Nothing in this Act (or an amendment made 
     by this Act) shall be construed to alter or amend the Social 
     Security Act (or any regulation promulgated under that Act).
       (b) Transfers.--
       (1) Estimate of secretary.--The Secretary of the Treasury 
     shall annually estimate the impact that the enactment of this 
     Act has on the income and balances of the trust funds 
     established under section 201 of the Social Security Act (42 
     U.S.C. 401).
       (2) Transfer of funds.--If, under paragraph (1), the 
     Secretary of the Treasury estimates that the enactment of 
     this Act has a negative impact on the income and balances of 
     the trust funds established under section 201 of the Social 
     Security Act (42 U.S.C. 401), the Secretary shall transfer, 
     not less frequently than quarterly, from the general revenues 
     of the Federal Government an amount sufficient so as to 
     ensure that the income and balances of such trust funds are 
     not reduced as a result of the enactment of such Act.

     SEC. 702. CUSTOMS USER FEES.

       Section 13031(j)(3) of the Consolidated Omnibus Budget 
     Reconciliation Act of 1985 (19 U.S.C. 58c(j)(3)) is amended 
     by striking ``2003'' and inserting ``2011, except that fees 
     may not be charged under paragraphs (9) and (10) of such 
     subsection after March 31, 2006''.

     SEC. 703. FISCAL YEAR 2002 MEDICARE PAYMENTS.

       Notwithstanding any other provision of law, any letter of 
     credit under part B of title XVIII of the Social Security Act 
     (42 U.S.C. 1395j et seq.) that would otherwise be sent to the 
     Treasury or the Federal Reserve Board on September 30, 2002, 
     by a carrier with a contract under section 1842 of that Act 
     (42 U.S.C. 1395u) shall be sent on October 1, 2002.

     SEC. 704. SENSE OF SENATE WITH RESPECT TO PARTICIPATION IN 
                   CLINICAL TRIALS AND ACCESS TO SPECIALTY CARE.

       (a) Findings.--The Senate finds the following:
       (1) Breast cancer is the most common form of cancer among 
     women, excluding skin cancers.
       (2) During 2001, 182,800 new cases of female invasive 
     breast cancer will be diagnosed, and 40,800 women will die 
     from the disease.
       (3) In addition, 1,400 male breast cancer cases are 
     projected to be diagnosed, and 400 men will die from the 
     disease.
       (4) Breast cancer is the second leading cause of cancer 
     death among all women and the leading cause of cancer death 
     among women between ages 40 and 55.
       (5) This year 8,600 children are expected to be diagnosed 
     with cancer.
       (6) 1,500 children are expected to die from cancer this 
     year.
       (7) There are approximately 333,000 people diagnosed with 
     multiple sclerosis in the United States and 200 more cases 
     are diagnosed each week.
       (8) Parkinson's disease is a progressive disorder of the 
     central nervous system affecting 1,000,000 in the United 
     States.
       (9) An estimated 198,100 men will be diagnosed with 
     prostate cancer this year.
       (10) 31,500 men will die from prostate cancer this year. It 
     is the second leading cause of cancer in men.
       (11) While information obtained from clinical trials is 
     essential to finding cures for diseases, it is still research 
     which carries the risk of fatal results. Future efforts 
     should be taken to protect the health and safety of adults 
     and children who enroll in clinical trials.
       (12) While employers and health plans should be responsible 
     for covering the routine costs associated with federally 
     approved or funded clinical trials, such employers and health 
     plans should not be held legally responsible for the design, 
     implementation, or outcome of such clinical trials, 
     consistent with any applicable State or Federal liability 
     statutes.
       (b) Sense of the Senate.--It is the sense of the Senate 
     that--
       (1) men and women battling life-threatening, deadly 
     diseases, including advanced breast or ovarian cancer, should 
     have the opportunity to participate in a federally approved 
     or funded clinical trial recommended by their physician;
       (2) an individual should have the opportunity to 
     participate in a federally approved or funded clinical trial 
     recommended by their physician if--
       (A) that individual--
       (i) has a life-threatening or serious illness for which no 
     standard treatment is effective;
       (ii) is eligible to participate in a federally approved or 
     funded clinical trial according to the trial protocol with 
     respect to treatment of the illness;
       (B) that individual's participation in the trial offers 
     meaningful potential for significant clinical benefit for the 
     individual; and
       (C) either--
       (i) the referring physician is a participating health care 
     professional and has concluded that the individual's 
     participation in the trial would be appropriate, based upon 
     the individual meeting the conditions described in 
     subparagraph (A); or
       (ii) the participant, beneficiary, or enrollee provides 
     medical and scientific information establishing that the 
     individual's participation in the trial would be appropriate, 
     based upon the individual meeting the conditions described in 
     subparagraph (A);
       (3) a child with a life-threatening illness, including 
     cancer, should be allowed to participate in a federally 
     approved or funded clinical trial if that participation meets 
     the requirements of paragraph (2);
       (4) a child with a rare cancer should be allowed to go to a 
     cancer center capable of providing high quality care for that 
     disease; and
       (5) a health maintenance organization's decision that an 
     in-network physician without the necessary expertise can 
     provide care for a seriously ill patient, including a woman 
     battling cancer, should be appealable to an independent, 
     impartial body, and that this same right should be available 
     to all Americans in need of access to high quality specialty 
     care.

     SEC. 705. SENSE OF THE SENATE REGARDING FAIR REVIEW PROCESS.

       (a) Findings.--The Senate finds the following:
       (1) A fair, timely, impartial independent external appeals 
     process is essential to any meaningful program of patient 
     protection.
       (2) The independence and objectivity of the review 
     organization and review process must be ensured.
       (3) It is incompatible with a fair and independent appeals 
     process to allow a health maintenance organization to select 
     the review organization that is entrusted with providing a 
     neutral and unbiased medical review.
       (4) The American Arbitration Association and arbitration 
     standards adopted under chapter 44 of title 28, United States 
     Code (28 U.S.C. 651 et seq.) both prohibit, as inherently 
     unfair, the right of one party to a dispute to choose the 
     judge in that dispute.
       (b) Sense of the Senate.--It is the sense of the Senate 
     that--
       (1) every patient who is denied care by a health 
     maintenance organization or other health insurance company 
     should be entitled to a fair, speedy, impartial appeal to a 
     review organization that has not been selected by the health 
     plan;

[[Page H5247]]

       (2) the States should be empowered to maintain and develop 
     the appropriate process for selection of the independent 
     external review entity;
       (3) a child battling a rare cancer whose health maintenance 
     organization has denied a covered treatment recommended by 
     its physician should be entitled to a fair and impartial 
     external appeal to a review organization that has not been 
     chosen by the organization or plan that has denied the care; 
     and
       (4) patient protection legislation should not pre-empt 
     existing State laws in States where there already are strong 
     laws in place regarding the selection of independent review 
     organizations.

     SEC. 706. ANNUAL REVIEW.

       (a) In General.--Not later than 24 months after the general 
     effective date referred to in section 601(a)(1), and annually 
     thereafter for each of the succeeding 4 calendar years (or 
     until a repeal is effective under subsection (b)), the 
     Secretary of Health and Human Services shall request that the 
     Institute of Medicine of the National Academy of Sciences 
     prepare and submit to the appropriate committees of Congress 
     a report concerning the impact of this Act, and the 
     amendments made by this Act, on the number of individuals in 
     the United States with health insurance coverage.
       (b) Limitation With Respect to Certain Plans.--If the 
     Secretary, in any report submitted under subsection (a), 
     determines that more than 1,000,000 individuals in the United 
     States have lost their health insurance coverage as a result 
     of the enactment of this Act, as compared to the number of 
     individuals with health insurance coverage in the 12-month 
     period preceding the date of enactment of this Act, section 
     402 of this Act shall be repealed effective on the date that 
     is 12 month after the date on which the report is submitted, 
     and the submission of any further reports under subsection 
     (a) shall not be required.
       (c) Funding.--From funds appropriated to the Department of 
     Health and Human Services for fiscal years 2003 and 2004, the 
     Secretary of Health and Human Services shall provide for such 
     funding as the Secretary determines necessary for the conduct 
     of the study of the National Academy of Sciences under this 
     section.

     SEC. 707. DEFINITION OF BORN-ALIVE INFANT.

       (a) In General.--Chapter 1 of title 1, United States Code, 
     is amended by adding at the end the following:

     ``Sec. 8. `Person', `human being', `child', and `individual' 
       as including born-alive infant

       ``(a) In determining the meaning of any Act of Congress, or 
     of any ruling, regulation, or interpretation of the various 
     administrative bureaus and agencies of the United States, the 
     words `person', `human being', `child', and `individual', 
     shall include every infant member of the species homo sapiens 
     who is born alive at any stage of development.
       ``(b) As used in this section, the term `born alive', with 
     respect to a member of the species homo sapiens, means the 
     complete expulsion or extraction from his or her mother of 
     that member, at any stage of development, who after such 
     expulsion or extraction breathes or has a beating heart, 
     pulsation of the umbilical cord, or definite movement of 
     voluntary muscles, regardless of whether the umbilical cord 
     has been cut, and regardless of whether the expulsion or 
     extraction occurs as a result of natural or induced labor, 
     caesarean section, or induced abortion.
       ``(c) Nothing in this section shall be construed to affirm, 
     deny, expand, or contract any legal status or legal right 
     applicable to any member of the species homo sapiens at any 
     point prior to being born alive as defined in this 
     section.''.
       (b) Clerical Amendment.--The table of sections at the 
     beginning of chapter 1 of title 1, United States Code, is 
     amended by adding at the end the following new item:

``8. `Person', `human being', `child', and `individual' as including 
              born-alive infant.''.

  The CHAIRMAN. No amendment is in order except those printed in House 
Report 107-184. Each amendment may be offered only in the order 
printed, may be offered only by a Member designated in the report, 
shall be considered read, debatable for the time specified in the 
report, equally divided and controlled by the proponent and an 
opponent, shall not be subject to amendment, and shall not be subject 
to a demand for division of the question.
  It is now in order to consider Amendment No. 1 printed in House 
Report 107-184.


                 Amendment No. 1 Offered by Mr. Thomas

  Mr. THOMAS. Mr. Chairman, I offer an amendment.
  The CHAIRMAN. The Clerk will designate the amendment.
  The text of the amendment is as follows:

       Amendment No. 1 offered by Mr. Thomas:
       Insert before section 401 the following heading (and 
     conform the table of contents accordingly):

                     Subtitle A--General Provisions

       In section 301(a), insert ``subtitle A of'' before ``title 
     IV''.
       Add at the end of title IV the following new subtitle (and 
     conform the table of contents accordingly):

                  Subtitle B--Association Health Plans

     SEC. 421. RULES GOVERNING ASSOCIATION HEALTH PLANS.

       (a) In General.--Subtitle B of title I of the Employee 
     Retirement Income Security Act of 1974 is amended by adding 
     after part 7 the following new part:

           ``Part 8--Rules Governing Association Health Plans

     ``SEC. 801. ASSOCIATION HEALTH PLANS.

       ``(a) In General.--For purposes of this part, the term 
     `association health plan' means a group health plan whose 
     sponsor is (or is deemed under this part to be) described in 
     subsection (b).
       ``(b) Sponsorship.--The sponsor of a group health plan is 
     described in this subsection if such sponsor--
       ``(1) is organized and maintained in good faith, with a 
     constitution and bylaws specifically stating its purpose and 
     providing for periodic meetings on at least an annual basis, 
     as a bona fide trade association, a bona fide industry 
     association (including a rural electric cooperative 
     association or a rural telephone cooperative association), a 
     bona fide professional association, or a bona fide chamber of 
     commerce (or similar bona fide business association, 
     including a corporation or similar organization that operates 
     on a cooperative basis (within the meaning of section 1381 of 
     the Internal Revenue Code of 1986)), for substantial purposes 
     other than that of obtaining or providing medical care;
       ``(2) is established as a permanent entity which receives 
     the active support of its members and requires for membership 
     payment on a periodic basis of dues or payments necessary to 
     maintain eligibility for membership in the sponsor; and
       ``(3) does not condition membership, such dues or payments, 
     or coverage under the plan on the basis of health status-
     related factors with respect to the employees of its members 
     (or affiliated members), or the dependents of such employees, 
     and does not condition such dues or payments on the basis of 
     group health plan participation.

     Any sponsor consisting of an association of entities which 
     meet the requirements of paragraphs (1), (2), and (3) shall 
     be deemed to be a sponsor described in this subsection.

     ``SEC. 802. CERTIFICATION OF ASSOCIATION HEALTH PLANS.

       ``(a) In General.--The applicable authority shall prescribe 
     by regulation, through negotiated rulemaking, a procedure 
     under which, subject to subsection (b), the applicable 
     authority shall certify association health plans which apply 
     for certification as meeting the requirements of this part.
       ``(b) Standards.--Under the procedure prescribed pursuant 
     to subsection (a), in the case of an association health plan 
     that provides at least one benefit option which does not 
     consist of health insurance coverage, the applicable 
     authority shall certify such plan as meeting the requirements 
     of this part only if the applicable authority is satisfied 
     that the applicable requirements of this part are met (or, 
     upon the date on which the plan is to commence operations, 
     will be met) with respect to the plan.
       ``(c) Requirements Applicable to Certified Plans.--An 
     association health plan with respect to which certification 
     under this part is in effect shall meet the applicable 
     requirements of this part, effective on the date of 
     certification (or, if later, on the date on which the plan is 
     to commence operations).
       ``(d) Requirements for Continued Certification.--The 
     applicable authority may provide by regulation, through 
     negotiated rulemaking, for continued certification of 
     association health plans under this part.
       ``(e) Class Certification for Fully Insured Plans.--The 
     applicable authority shall establish a class certification 
     procedure for association health plans under which all 
     benefits consist of health insurance coverage. Under such 
     procedure, the applicable authority shall provide for the 
     granting of certification under this part to the plans in 
     each class of such association health plans upon appropriate 
     filing under such procedure in connection with plans in such 
     class and payment of the prescribed fee under section 807(a).
       ``(f) Certification of Self-Insured Association Health 
     Plans.--An association health plan which offers one or more 
     benefit options which do not consist of health insurance 
     coverage may be certified under this part only if such plan 
     consists of any of the following:
       ``(1) a plan which offered such coverage on the date of the 
     enactment of the Bipartisan Patient Protection Act,
       ``(2) a plan under which the sponsor does not restrict 
     membership to one or more trades and businesses or industries 
     and whose eligible participating employers represent a broad 
     cross-section of trades and businesses or industries, or
       ``(3) a plan whose eligible participating employers 
     represent one or more trades or businesses, or one or more 
     industries, consisting of any of the following: agriculture; 
     equipment and automobile dealerships; barbering and 
     cosmetology; certified public accounting practices; child 
     care; construction; dance, theatrical and orchestra 
     productions; disinfecting and pest control; financial 
     services; fishing; foodservice establishments; hospitals; 
     labor organizations; logging; manufacturing (metals); mining; 
     medical and dental practices; medical laboratories; 
     professional consulting services; sanitary services;

[[Page H5248]]

     transportation (local and freight); warehousing; wholesaling/
     distributing; or any other trade or business or industry 
     which has been indicated as having average or above-average 
     risk or health claims experience by reason of State rate 
     filings, denials of coverage, proposed premium rate levels, 
     or other means demonstrated by such plan in accordance with 
     regulations which the Secretary shall prescribe through 
     negotiated rulemaking.

     ``SEC. 803. REQUIREMENTS RELATING TO SPONSORS AND BOARDS OF 
                   TRUSTEES.

       ``(a) Sponsor.--The requirements of this subsection are met 
     with respect to an association health plan if the sponsor has 
     met (or is deemed under this part to have met) the 
     requirements of section 801(b) for a continuous period of not 
     less than 3 years ending with the date of the application for 
     certification under this part.
       ``(b) Board of Trustees.--The requirements of this 
     subsection are met with respect to an association health plan 
     if the following requirements are met:
       ``(1) Fiscal control.--The plan is operated, pursuant to a 
     trust agreement, by a board of trustees which has complete 
     fiscal control over the plan and which is responsible for all 
     operations of the plan.
       ``(2) Rules of operation and financial controls.--The board 
     of trustees has in effect rules of operation and financial 
     controls, based on a 3-year plan of operation, adequate to 
     carry out the terms of the plan and to meet all requirements 
     of this title applicable to the plan.
       ``(3) Rules governing relationship to participating 
     employers and to contractors.--
       ``(A) In general.--Except as provided in subparagraphs (B) 
     and (C), the members of the board of trustees are individuals 
     selected from individuals who are the owners, officers, 
     directors, or employees of the participating employers or who 
     are partners in the participating employers and actively 
     participate in the business.
       ``(B) Limitation.--
       ``(i) General rule.--Except as provided in clauses (ii) and 
     (iii), no such member is an owner, officer, director, or 
     employee of, or partner in, a contract administrator or other 
     service provider to the plan.
       ``(ii) Limited exception for providers of services solely 
     on behalf of the sponsor.--Officers or employees of a sponsor 
     which is a service provider (other than a contract 
     administrator) to the plan may be members of the board if 
     they constitute not more than 25 percent of the membership of 
     the board and they do not provide services to the plan other 
     than on behalf of the sponsor.
       ``(iii) Treatment of providers of medical care.--In the 
     case of a sponsor which is an association whose membership 
     consists primarily of providers of medical care, clause (i) 
     shall not apply in the case of any service provider described 
     in subparagraph (A) who is a provider of medical care under 
     the plan.
       ``(C) Certain plans excluded.--Subparagraph (A) shall not 
     apply to an association health plan which is in existence on 
     the date of the enactment of the Bipartisan Patient 
     Protection Act.
       ``(D) Sole authority.--The board has sole authority under 
     the plan to approve applications for participation in the 
     plan and to contract with a service provider to administer 
     the day-to-day affairs of the plan.
       ``(c) Treatment of Franchise Networks.--In the case of a 
     group health plan which is established and maintained by a 
     franchiser for a franchise network consisting of its 
     franchisees--
       ``(1) the requirements of subsection (a) and section 
     801(a)(1) shall be deemed met if such requirements would 
     otherwise be met if the franchiser were deemed to be the 
     sponsor referred to in section 801(b), such network were 
     deemed to be an association described in section 801(b), and 
     each franchisee were deemed to be a member (of the 
     association and the sponsor) referred to in section 801(b); 
     and
       ``(2) the requirements of section 804(a)(1) shall be deemed 
     met.

     The Secretary may by regulation, through negotiated 
     rulemaking, define for purposes of this subsection the terms 
     `franchiser', `franchise network', and `franchisee'.
       ``(d) Certain Collectively Bargained Plans.--
       ``(1) In general.--In the case of a group health plan 
     described in paragraph (2)--
       ``(A) the requirements of subsection (a) and section 
     801(a)(1) shall be deemed met;
       ``(B) the joint board of trustees shall be deemed a board 
     of trustees with respect to which the requirements of 
     subsection (b) are met; and
       ``(C) the requirements of section 804 shall be deemed met.
       ``(2) Requirements.--A group health plan is described in 
     this paragraph if--
       ``(A) the plan is a multiemployer plan; or
       ``(B) the plan is in existence on April 1, 2001, and would 
     be described in section 3(40)(A)(i) but solely for the 
     failure to meet the requirements of section 3(40)(C)(ii).
       ``(3) Construction.--A group health plan described in 
     paragraph (2) shall only be treated as an association health 
     plan under this part if the sponsor of the plan applies for, 
     and obtains, certification of the plan as an association 
     health plan under this part.

     ``SEC. 804. PARTICIPATION AND COVERAGE REQUIREMENTS.

       ``(a) Covered Employers and Individuals.--The requirements 
     of this subsection are met with respect to an association 
     health plan if, under the terms of the plan--
       ``(1) each participating employer must be--
       ``(A) a member of the sponsor,
       ``(B) the sponsor, or
       ``(C) an affiliated member of the sponsor with respect to 
     which the requirements of subsection (b) are met,

     except that, in the case of a sponsor which is a professional 
     association or other individual-based association, if at 
     least one of the officers, directors, or employees of an 
     employer, or at least one of the individuals who are partners 
     in an employer and who actively participates in the business, 
     is a member or such an affiliated member of the sponsor, 
     participating employers may also include such employer; and
       ``(2) all individuals commencing coverage under the plan 
     after certification under this part must be--
       ``(A) active or retired owners (including self-employed 
     individuals), officers, directors, or employees of, or 
     partners in, participating employers; or
       ``(B) the beneficiaries of individuals described in 
     subparagraph (A).
       ``(b) Coverage of Previously Uninsured Employees.--In the 
     case of an association health plan in existence on the date 
     of the enactment of the Bipartisan Patient Protection Act, an 
     affiliated member of the sponsor of the plan may be offered 
     coverage under the plan as a participating employer only if--
       ``(1) the affiliated member was an affiliated member on the 
     date of certification under this part; or
       ``(2) during the 12-month period preceding the date of the 
     offering of such coverage, the affiliated member has not 
     maintained or contributed to a group health plan with respect 
     to any of its employees who would otherwise be eligible to 
     participate in such association health plan.
       ``(c) Individual Market Unaffected.--The requirements of 
     this subsection are met with respect to an association health 
     plan if, under the terms of the plan, no participating 
     employer may provide health insurance coverage in the 
     individual market for any employee not covered under the plan 
     which is similar to the coverage contemporaneously provided 
     to employees of the employer under the plan, if such 
     exclusion of the employee from coverage under the plan is 
     based on a health status-related factor with respect to the 
     employee and such employee would, but for such exclusion on 
     such basis, be eligible for coverage under the plan.
       ``(d) Prohibition of Discrimination Against Employers and 
     Employees Eligible To Participate.--The requirements of this 
     subsection are met with respect to an association health plan 
     if--
       ``(1) under the terms of the plan, all employers meeting 
     the preceding requirements of this section are eligible to 
     qualify as participating employers for all geographically 
     available coverage options, unless, in the case of any such 
     employer, participation or contribution requirements of the 
     type referred to in section 2711 of the Public Health Service 
     Act are not met;
       ``(2) upon request, any employer eligible to participate is 
     furnished information regarding all coverage options 
     available under the plan; and
       ``(3) the applicable requirements of sections 701, 702, and 
     703 are met with respect to the plan.

     ``SEC. 805. OTHER REQUIREMENTS RELATING TO PLAN DOCUMENTS, 
                   CONTRIBUTION RATES, AND BENEFIT OPTIONS.

       ``(a) In General.--The requirements of this section are met 
     with respect to an association health plan if the following 
     requirements are met:
       ``(1) Contents of governing instruments.--The instruments 
     governing the plan include a written instrument, meeting the 
     requirements of an instrument required under section 
     402(a)(1), which--
       ``(A) provides that the board of trustees serves as the 
     named fiduciary required for plans under section 402(a)(1) 
     and serves in the capacity of a plan administrator (referred 
     to in section 3(16)(A));
       ``(B) provides that the sponsor of the plan is to serve as 
     plan sponsor (referred to in section 3(16)(B)); and
       ``(C) incorporates the requirements of section 806.
       ``(2) Contribution rates must be nondiscriminatory.--
       ``(A) The contribution rates for any participating small 
     employer do not vary on the basis of the claims experience of 
     such employer and do not vary on the basis of the type of 
     business or industry in which such employer is engaged.
       ``(B) Nothing in this title or any other provision of law 
     shall be construed to preclude an association health plan, or 
     a health insurance issuer offering health insurance coverage 
     in connection with an association health plan, from--
       ``(i) setting contribution rates based on the claims 
     experience of the plan; or
       ``(ii) varying contribution rates for small employers in a 
     State to the extent that such rates could vary using the same 
     methodology employed in such State for regulating premium 
     rates in the small group market with respect to health 
     insurance coverage offered in connection with bona fide 
     associations (within the meaning of section 2791(d)(3) of the 
     Public Health Service Act),

     subject to the requirements of section 702(b) relating to 
     contribution rates.
       ``(3) Floor for number of covered individuals with respect 
     to certain plans.--If any benefit option under the plan does 
     not consist of health insurance coverage, the

[[Page H5249]]

     plan has as of the beginning of the plan year not fewer than 
     1,000 participants and beneficiaries.
       ``(4) Marketing requirements.--
       ``(A) In general.--If a benefit option which consists of 
     health insurance coverage is offered under the plan, State-
     licensed insurance agents shall be used to distribute to 
     small employers coverage which does not consist of health 
     insurance coverage in a manner comparable to the manner in 
     which such agents are used to distribute health insurance 
     coverage.
       ``(B) State-licensed insurance agents.--For purposes of 
     subparagraph (A), the term `State-licensed insurance agents' 
     means one or more agents who are licensed in a State and are 
     subject to the laws of such State relating to licensure, 
     qualification, testing, examination, and continuing education 
     of persons authorized to offer, sell, or solicit health 
     insurance coverage in such State.
       ``(5) Regulatory requirements.--Such other requirements as 
     the applicable authority determines are necessary to carry 
     out the purposes of this part, which shall be prescribed by 
     the applicable authority by regulation through negotiated 
     rulemaking.
       ``(b) Ability of Association Health Plans To Design Benefit 
     Options.--Subject to section 514(e), nothing in this part or 
     any provision of State law (as defined in section 514(c)(1)) 
     shall be construed to preclude an association health plan, or 
     a health insurance issuer offering health insurance coverage 
     in connection with an association health plan, from 
     exercising its sole discretion in selecting the specific 
     items and services consisting of medical care to be included 
     as benefits under such plan or coverage, except (subject to 
     section 514) in the case of any law to the extent that it (1) 
     prohibits an exclusion of a specific disease from such 
     coverage, or (2) is not preempted under section 731(a)(1) 
     with respect to matters governed by section 711 or 712.

     ``SEC. 806. MAINTENANCE OF RESERVES AND PROVISIONS FOR 
                   SOLVENCY FOR PLANS PROVIDING HEALTH BENEFITS IN 
                   ADDITION TO HEALTH INSURANCE COVERAGE.

       ``(a) In General.--The requirements of this section are met 
     with respect to an association health plan if--
       ``(1) the benefits under the plan consist solely of health 
     insurance coverage; or
       ``(2) if the plan provides any additional benefit options 
     which do not consist of health insurance coverage, the plan--
       ``(A) establishes and maintains reserves with respect to 
     such additional benefit options, in amounts recommended by 
     the qualified actuary, consisting of--
       ``(i) a reserve sufficient for unearned contributions;
       ``(ii) a reserve sufficient for benefit liabilities which 
     have been incurred, which have not been satisfied, and for 
     which risk of loss has not yet been transferred, and for 
     expected administrative costs with respect to such benefit 
     liabilities;
       ``(iii) a reserve sufficient for any other obligations of 
     the plan; and
       ``(iv) a reserve sufficient for a margin of error and other 
     fluctuations, taking into account the specific circumstances 
     of the plan; and
       ``(B) establishes and maintains aggregate and specific 
     excess /stop loss insurance and solvency indemnification, 
     with respect to such additional benefit options for which 
     risk of loss has not yet been transferred, as follows:
       ``(i) The plan shall secure aggregate excess /stop loss 
     insurance for the plan with an attachment point which is not 
     greater than 125 percent of expected gross annual claims. The 
     applicable authority may by regulation, through negotiated 
     rulemaking, provide for upward adjustments in the amount of 
     such percentage in specified circumstances in which the plan 
     specifically provides for and maintains reserves in excess of 
     the amounts required under subparagraph (A).
       ``(ii) The plan shall secure specific excess /stop loss 
     insurance for the plan with an attachment point which is at 
     least equal to an amount recommended by the plan's qualified 
     actuary. The applicable authority may by regulation, through 
     negotiated rulemaking, provide for adjustments in the amount 
     of such insurance in specified circumstances in which the 
     plan specifically provides for and maintains reserves in 
     excess of the amounts required under subparagraph (A).
       ``(iii) The plan shall secure indemnification insurance for 
     any claims which the plan is unable to satisfy by reason of a 
     plan termination.

     Any regulations prescribed by the applicable authority 
     pursuant to clause (i) or (ii) of subparagraph (B) may allow 
     for such adjustments in the required levels of excess /stop 
     loss insurance as the qualified actuary may recommend, taking 
     into account the specific circumstances of the plan.
       ``(b) Minimum Surplus in Addition to Claims Reserves.--In 
     the case of any association health plan described in 
     subsection (a)(2), the requirements of this subsection are 
     met if the plan establishes and maintains surplus in an 
     amount at least equal to--
       ``(1) $500,000, or
       ``(2) such greater amount (but not greater than $2,000,000) 
     as may be set forth in regulations prescribed by the 
     applicable authority through negotiated rulemaking, based on 
     the level of aggregate and specific excess /stop loss 
     insurance provided with respect to such plan.
       ``(c) Additional Requirements.--In the case of any 
     association health plan described in subsection (a)(2), the 
     applicable authority may provide such additional requirements 
     relating to reserves and excess /stop loss insurance as the 
     applicable authority considers appropriate. Such requirements 
     may be provided by regulation, through negotiated rulemaking, 
     with respect to any such plan or any class of such plans.
       ``(d) Adjustments for Excess /Stop Loss Insurance.--The 
     applicable authority may provide for adjustments to the 
     levels of reserves otherwise required under subsections (a) 
     and (b) with respect to any plan or class of plans to take 
     into account excess /stop loss insurance provided with 
     respect to such plan or plans.
       ``(e) Alternative Means of Compliance.--The applicable 
     authority may permit an association health plan described in 
     subsection (a)(2) to substitute, for all or part of the 
     requirements of this section (except subsection 
     (a)(2)(B)(iii)), such security, guarantee, hold-harmless 
     arrangement, or other financial arrangement as the applicable 
     authority determines to be adequate to enable the plan to 
     fully meet all its financial obligations on a timely basis 
     and is otherwise no less protective of the interests of 
     participants and beneficiaries than the requirements for 
     which it is substituted. The applicable authority may take 
     into account, for purposes of this subsection, evidence 
     provided by the plan or sponsor which demonstrates an 
     assumption of liability with respect to the plan. Such 
     evidence may be in the form of a contract of indemnification, 
     lien, bonding, insurance, letter of credit, recourse under 
     applicable terms of the plan in the form of assessments of 
     participating employers, security, or other financial 
     arrangement.
       ``(f) Measures To Ensure Continued Payment of Benefits by 
     Certain Plans in Distress.--
       ``(1) Payments by certain plans to association health plan 
     fund.--
       ``(A) In general.--In the case of an association health 
     plan described in subsection (a)(2), the requirements of this 
     subsection are met if the plan makes payments into the 
     Association Health Plan Fund under this subparagraph when 
     they are due. Such payments shall consist of annual payments 
     in the amount of $5,000, and, in addition to such annual 
     payments, such supplemental payments as the Secretary may 
     determine to be necessary under paragraph (2). Payments under 
     this paragraph are payable to the Fund at the time determined 
     by the Secretary. Initial payments are due in advance of 
     certification under this part. Payments shall continue to 
     accrue until a plan's assets are distributed pursuant to a 
     termination procedure.
       ``(B) Penalties for failure to make payments.--If any 
     payment is not made by a plan when it is due, a late payment 
     charge of not more than 100 percent of the payment which was 
     not timely paid shall be payable by the plan to the Fund.
       ``(C) Continued duty of the secretary.--The Secretary shall 
     not cease to carry out the provisions of paragraph (2) on 
     account of the failure of a plan to pay any payment when due.
       ``(2) Payments by secretary to continue excess /stop loss 
     insurance coverage and indemnification insurance coverage for 
     certain plans.--In any case in which the applicable authority 
     determines that there is, or that there is reason to believe 
     that there will be: (A) a failure to take necessary 
     corrective actions under section 809(a) with respect to an 
     association health plan described in subsection (a)(2); or 
     (B) a termination of such a plan under section 809(b) or 
     810(b)(8) (and, if the applicable authority is not the 
     Secretary, certifies such determination to the Secretary), 
     the Secretary shall determine the amounts necessary to make 
     payments to an insurer (designated by the Secretary) to 
     maintain in force excess /stop loss insurance coverage or 
     indemnification insurance coverage for such plan, if the 
     Secretary determines that there is a reasonable expectation 
     that, without such payments, claims would not be satisfied by 
     reason of termination of such coverage. The Secretary shall, 
     to the extent provided in advance in appropriation Acts, pay 
     such amounts so determined to the insurer designated by the 
     Secretary.
       ``(3) Association health plan fund.--
       ``(A) In general.--There is established on the books of the 
     Treasury a fund to be known as the `Association Health Plan 
     Fund'. The Fund shall be available for making payments 
     pursuant to paragraph (2). The Fund shall be credited with 
     payments received pursuant to paragraph (1)(A), penalties 
     received pursuant to paragraph (1)(B); and earnings on 
     investments of amounts of the Fund under subparagraph (B).
       ``(B) Investment.--Whenever the Secretary determines that 
     the moneys of the fund are in excess of current needs, the 
     Secretary may request the investment of such amounts as the 
     Secretary determines advisable by the Secretary of the 
     Treasury in obligations issued or guaranteed by the United 
     States.
       ``(g) Excess /Stop Loss Insurance.--For purposes of this 
     section--
       ``(1) Aggregate excess /stop loss insurance.--The term 
     `aggregate excess /stop loss insurance' means, in connection 
     with an association health plan, a contract--
       ``(A) under which an insurer (meeting such minimum 
     standards as the applicable authority may prescribe by 
     regulation through negotiated rulemaking) provides for 
     payment to the plan with respect to aggregate

[[Page H5250]]

     claims under the plan in excess of an amount or amounts 
     specified in such contract;
       ``(B) which is guaranteed renewable; and
       ``(C) which allows for payment of premiums by any third 
     party on behalf of the insured plan.
       ``(2) Specific excess /stop loss insurance.--The term 
     `specific excess /stop loss insurance' means, in connection 
     with an association health plan, a contract--
       ``(A) under which an insurer (meeting such minimum 
     standards as the applicable authority may prescribe by 
     regulation through negotiated rulemaking) provides for 
     payment to the plan with respect to claims under the plan in 
     connection with a covered individual in excess of an amount 
     or amounts specified in such contract in connection with such 
     covered individual;
       ``(B) which is guaranteed renewable; and
       ``(C) which allows for payment of premiums by any third 
     party on behalf of the insured plan.
       ``(h) Indemnification Insurance.--For purposes of this 
     section, the term `indemnification insurance' means, in 
     connection with an association health plan, a contract--
       ``(1) under which an insurer (meeting such minimum 
     standards as the applicable authority may prescribe through 
     negotiated rulemaking) provides for payment to the plan with 
     respect to claims under the plan which the plan is unable to 
     satisfy by reason of a termination pursuant to section 809(b) 
     (relating to mandatory termination);
       ``(2) which is guaranteed renewable and noncancellable for 
     any reason (except as the applicable authority may prescribe 
     by regulation through negotiated rulemaking); and
       ``(3) which allows for payment of premiums by any third 
     party on behalf of the insured plan.
       ``(i) Reserves.--For purposes of this section, the term 
     `reserves' means, in connection with an association health 
     plan, plan assets which meet the fiduciary standards under 
     part 4 and such additional requirements regarding liquidity 
     as the applicable authority may prescribe through negotiated 
     rulemaking.
       ``(j) Solvency Standards Working Group.--
       ``(1) In general.--Within 90 days after the date of the 
     enactment of the Bipartisan Patient Protection Act, the 
     applicable authority shall establish a Solvency Standards 
     Working Group. In prescribing the initial regulations under 
     this section, the applicable authority shall take into 
     account the recommendations of such Working Group.
       ``(2) Membership.--The Working Group shall consist of not 
     more than 15 members appointed by the applicable authority. 
     The applicable authority shall include among persons invited 
     to membership on the Working Group at least one of each of 
     the following:
       ``(A) a representative of the National Association of 
     Insurance Commissioners;
       ``(B) a representative of the American Academy of 
     Actuaries;
       ``(C) a representative of the State governments, or their 
     interests;
       ``(D) a representative of existing self-insured 
     arrangements, or their interests;
       ``(E) a representative of associations of the type referred 
     to in section 801(b)(1), or their interests; and
       ``(F) a representative of multiemployer plans that are 
     group health plans, or their interests.

     ``SEC. 807. REQUIREMENTS FOR APPLICATION AND RELATED 
                   REQUIREMENTS.

       ``(a) Filing Fee.--Under the procedure prescribed pursuant 
     to section 802(a), an association health plan shall pay to 
     the applicable authority at the time of filing an application 
     for certification under this part a filing fee in the amount 
     of $5,000, which shall be available in the case of the 
     Secretary, to the extent provided in appropriation Acts, for 
     the sole purpose of administering the certification 
     procedures applicable with respect to association health 
     plans.
       ``(b) Information To Be Included in Application for 
     Certification.--An application for certification under this 
     part meets the requirements of this section only if it 
     includes, in a manner and form which shall be prescribed by 
     the applicable authority through negotiated rulemaking, at 
     least the following information:
       ``(1) Identifying information.--The names and addresses 
     of--
       ``(A) the sponsor; and
       ``(B) the members of the board of trustees of the plan.
       ``(2) States in which plan intends to do business.--The 
     States in which participants and beneficiaries under the plan 
     are to be located and the number of them expected to be 
     located in each such State.
       ``(3) Bonding requirements.--Evidence provided by the board 
     of trustees that the bonding requirements of section 412 will 
     be met as of the date of the application or (if later) 
     commencement of operations.
       ``(4) Plan documents.--A copy of the documents governing 
     the plan (including any bylaws and trust agreements), the 
     summary plan description, and other material describing the 
     benefits that will be provided to participants and 
     beneficiaries under the plan.
       ``(5) Agreements with service providers.--A copy of any 
     agreements between the plan and contract administrators and 
     other service providers.
       ``(6) Funding report.--In the case of association health 
     plans providing benefits options in addition to health 
     insurance coverage, a report setting forth information with 
     respect to such additional benefit options determined as of a 
     date within the 120-day period ending with the date of the 
     application, including the following:
       ``(A) Reserves.--A statement, certified by the board of 
     trustees of the plan, and a statement of actuarial opinion, 
     signed by a qualified actuary, that all applicable 
     requirements of section 806 are or will be met in accordance 
     with regulations which the applicable authority shall 
     prescribe through negotiated rulemaking.
       ``(B) Adequacy of contribution rates.--A statement of 
     actuarial opinion, signed by a qualified actuary, which sets 
     forth a description of the extent to which contribution rates 
     are adequate to provide for the payment of all obligations 
     and the maintenance of required reserves under the plan for 
     the 12-month period beginning with such date within such 120-
     day period, taking into account the expected coverage and 
     experience of the plan. If the contribution rates are not 
     fully adequate, the statement of actuarial opinion shall 
     indicate the extent to which the rates are inadequate and the 
     changes needed to ensure adequacy.
       ``(C) Current and projected value of assets and 
     liabilities.--A statement of actuarial opinion signed by a 
     qualified actuary, which sets forth the current value of the 
     assets and liabilities accumulated under the plan and a 
     projection of the assets, liabilities, income, and expenses 
     of the plan for the 12-month period referred to in 
     subparagraph (B). The income statement shall identify 
     separately the plan's administrative expenses and claims.
       ``(D) Costs of coverage to be charged and other expenses.--
     A statement of the costs of coverage to be charged, including 
     an itemization of amounts for administration, reserves, and 
     other expenses associated with the operation of the plan.
       ``(E) Other information.--Any other information as may be 
     determined by the applicable authority, by regulation through 
     negotiated rulemaking, as necessary to carry out the purposes 
     of this part.
       ``(c) Filing Notice of Certification With States.--A 
     certification granted under this part to an association 
     health plan shall not be effective unless written notice of 
     such certification is filed with the applicable State 
     authority of each State in which at least 25 percent of the 
     participants and beneficiaries under the plan are located. 
     For purposes of this subsection, an individual shall be 
     considered to be located in the State in which a known 
     address of such individual is located or in which such 
     individual is employed.
       ``(d) Notice of Material Changes.--In the case of any 
     association health plan certified under this part, 
     descriptions of material changes in any information which was 
     required to be submitted with the application for the 
     certification under this part shall be filed in such form and 
     manner as shall be prescribed by the applicable authority by 
     regulation through negotiated rulemaking. The applicable 
     authority may require by regulation, through negotiated 
     rulemaking, prior notice of material changes with respect to 
     specified matters which might serve as the basis for 
     suspension or revocation of the certification.
       ``(e) Reporting Requirements for Certain Association Health 
     Plans.--An association health plan certified under this part 
     which provides benefit options in addition to health 
     insurance coverage for such plan year shall meet the 
     requirements of section 103 by filing an annual report under 
     such section which shall include information described in 
     subsection (b)(6) with respect to the plan year and, 
     notwithstanding section 104(a)(1)(A), shall be filed with the 
     applicable authority not later than 90 days after the close 
     of the plan year (or on such later date as may be prescribed 
     by the applicable authority). The applicable authority may 
     require by regulation through negotiated rulemaking such 
     interim reports as it considers appropriate.
       ``(f) Engagement of Qualified Actuary.--The board of 
     trustees of each association health plan which provides 
     benefits options in addition to health insurance coverage and 
     which is applying for certification under this part or is 
     certified under this part shall engage, on behalf of all 
     participants and beneficiaries, a qualified actuary who shall 
     be responsible for the preparation of the materials 
     comprising information necessary to be submitted by a 
     qualified actuary under this part. The qualified actuary 
     shall utilize such assumptions and techniques as are 
     necessary to enable such actuary to form an opinion as to 
     whether the contents of the matters reported under this 
     part--
       ``(1) are in the aggregate reasonably related to the 
     experience of the plan and to reasonable expectations; and
       ``(2) represent such actuary's best estimate of anticipated 
     experience under the plan.

     The opinion by the qualified actuary shall be made with 
     respect to, and shall be made a part of, the annual report.

     ``SEC. 808. NOTICE REQUIREMENTS FOR VOLUNTARY TERMINATION.

       ``Except as provided in section 809(b), an association 
     health plan which is or has been certified under this part 
     may terminate (upon or at any time after cessation of 
     accruals in benefit liabilities) only if the board of 
     trustees--
       ``(1) not less than 60 days before the proposed termination 
     date, provides to the participants and beneficiaries a 
     written notice of intent to terminate stating that such 
     termination is intended and the proposed termination date;

[[Page H5251]]

       ``(2) develops a plan for winding up the affairs of the 
     plan in connection with such termination in a manner which 
     will result in timely payment of all benefits for which the 
     plan is obligated; and
       ``(3) submits such plan in writing to the applicable 
     authority.

     Actions required under this section shall be taken in such 
     form and manner as may be prescribed by the applicable 
     authority by regulation through negotiated rulemaking.

     ``SEC. 809. CORRECTIVE ACTIONS AND MANDATORY TERMINATION.

       ``(a) Actions To Avoid Depletion of Reserves.--An 
     association health plan which is certified under this part 
     and which provides benefits other than health insurance 
     coverage shall continue to meet the requirements of section 
     806, irrespective of whether such certification continues in 
     effect. The board of trustees of such plan shall determine 
     quarterly whether the requirements of section 806 are met. In 
     any case in which the board determines that there is reason 
     to believe that there is or will be a failure to meet such 
     requirements, or the applicable authority makes such a 
     determination and so notifies the board, the board shall 
     immediately notify the qualified actuary engaged by the plan, 
     and such actuary shall, not later than the end of the next 
     following month, make such recommendations to the board for 
     corrective action as the actuary determines necessary to 
     ensure compliance with section 806. Not later than 30 days 
     after receiving from the actuary recommendations for 
     corrective actions, the board shall notify the applicable 
     authority (in such form and manner as the applicable 
     authority may prescribe by regulation through negotiated 
     rulemaking) of such recommendations of the actuary for 
     corrective action, together with a description of the actions 
     (if any) that the board has taken or plans to take in 
     response to such recommendations. The board shall thereafter 
     report to the applicable authority, in such form and 
     frequency as the applicable authority may specify to the 
     board, regarding corrective action taken by the board until 
     the requirements of section 806 are met.
       ``(b) Mandatory Termination.--In any case in which--
       ``(1) the applicable authority has been notified under 
     subsection (a) of a failure of an association health plan 
     which is or has been certified under this part and is 
     described in section 806(a)(2) to meet the requirements of 
     section 806 and has not been notified by the board of 
     trustees of the plan that corrective action has restored 
     compliance with such requirements; and
       ``(2) the applicable authority determines that there is a 
     reasonable expectation that the plan will continue to fail to 
     meet the requirements of section 806,

     the board of trustees of the plan shall, at the direction of 
     the applicable authority, terminate the plan and, in the 
     course of the termination, take such actions as the 
     applicable authority may require, including satisfying any 
     claims referred to in section 806(a)(2)(B)(iii) and 
     recovering for the plan any liability under subsection 
     (a)(2)(B)(iii) or (e) of section 806, as necessary to ensure 
     that the affairs of the plan will be, to the maximum extent 
     possible, wound up in a manner which will result in timely 
     provision of all benefits for which the plan is obligated.

     ``SEC. 810. TRUSTEESHIP BY THE SECRETARY OF INSOLVENT 
                   ASSOCIATION HEALTH PLANS PROVIDING HEALTH 
                   BENEFITS IN ADDITION TO HEALTH INSURANCE 
                   COVERAGE.

       ``(a) Appointment of Secretary as Trustee for Insolvent 
     Plans.--Whenever the Secretary determines that an association 
     health plan which is or has been certified under this part 
     and which is described in section 806(a)(2) will be unable to 
     provide benefits when due or is otherwise in a financially 
     hazardous condition, as shall be defined by the Secretary by 
     regulation through negotiated rulemaking, the Secretary 
     shall, upon notice to the plan, apply to the appropriate 
     United States district court for appointment of the Secretary 
     as trustee to administer the plan for the duration of the 
     insolvency. The plan may appear as a party and other 
     interested persons may intervene in the proceedings at the 
     discretion of the court. The court shall appoint such 
     Secretary trustee if the court determines that the 
     trusteeship is necessary to protect the interests of the 
     participants and beneficiaries or providers of medical care 
     or to avoid any unreasonable deterioration of the financial 
     condition of the plan. The trusteeship of such Secretary 
     shall continue until the conditions described in the first 
     sentence of this subsection are remedied or the plan is 
     terminated.
       ``(b) Powers as Trustee.--The Secretary, upon appointment 
     as trustee under subsection (a), shall have the power--
       ``(1) to do any act authorized by the plan, this title, or 
     other applicable provisions of law to be done by the plan 
     administrator or any trustee of the plan;
       ``(2) to require the transfer of all (or any part) of the 
     assets and records of the plan to the Secretary as trustee;
       ``(3) to invest any assets of the plan which the Secretary 
     holds in accordance with the provisions of the plan, 
     regulations prescribed by the Secretary through negotiated 
     rulemaking, and applicable provisions of law;
       ``(4) to require the sponsor, the plan administrator, any 
     participating employer, and any employee organization 
     representing plan participants to furnish any information 
     with respect to the plan which the Secretary as trustee may 
     reasonably need in order to administer the plan;
       ``(5) to collect for the plan any amounts due the plan and 
     to recover reasonable expenses of the trusteeship;
       ``(6) to commence, prosecute, or defend on behalf of the 
     plan any suit or proceeding involving the plan;
       ``(7) to issue, publish, or file such notices, statements, 
     and reports as may be required by the Secretary by regulation 
     through negotiated rulemaking or required by any order of the 
     court;
       ``(8) to terminate the plan (or provide for its termination 
     in accordance with section 809(b)) and liquidate the plan 
     assets, to restore the plan to the responsibility of the 
     sponsor, or to continue the trusteeship;
       ``(9) to provide for the enrollment of plan participants 
     and beneficiaries under appropriate coverage options; and
       ``(10) to do such other acts as may be necessary to comply 
     with this title or any order of the court and to protect the 
     interests of plan participants and beneficiaries and 
     providers of medical care.
       ``(c) Notice of Appointment.--As soon as practicable after 
     the Secretary's appointment as trustee, the Secretary shall 
     give notice of such appointment to--
       ``(1) the sponsor and plan administrator;
       ``(2) each participant;
       ``(3) each participating employer; and
       ``(4) if applicable, each employee organization which, for 
     purposes of collective bargaining, represents plan 
     participants.
       ``(d) Additional Duties.--Except to the extent inconsistent 
     with the provisions of this title, or as may be otherwise 
     ordered by the court, the Secretary, upon appointment as 
     trustee under this section, shall be subject to the same 
     duties as those of a trustee under section 704 of title 11, 
     United States Code, and shall have the duties of a fiduciary 
     for purposes of this title.
       ``(e) Other Proceedings.--An application by the Secretary 
     under this subsection may be filed notwithstanding the 
     pendency in the same or any other court of any bankruptcy, 
     mortgage foreclosure, or equity receivership proceeding, or 
     any proceeding to reorganize, conserve, or liquidate such 
     plan or its property, or any proceeding to enforce a lien 
     against property of the plan.
       ``(f) Jurisdiction of Court.--
       ``(1) In general.--Upon the filing of an application for 
     the appointment as trustee or the issuance of a decree under 
     this section, the court to which the application is made 
     shall have exclusive jurisdiction of the plan involved and 
     its property wherever located with the powers, to the extent 
     consistent with the purposes of this section, of a court of 
     the United States having jurisdiction over cases under 
     chapter 11 of title 11, United States Code. Pending an 
     adjudication under this section such court shall stay, and 
     upon appointment by it of the Secretary as trustee, such 
     court shall continue the stay of, any pending mortgage 
     foreclosure, equity receivership, or other proceeding to 
     reorganize, conserve, or liquidate the plan, the sponsor, or 
     property of such plan or sponsor, and any other suit against 
     any receiver, conservator, or trustee of the plan, the 
     sponsor, or property of the plan or sponsor. Pending such 
     adjudication and upon the appointment by it of the Secretary 
     as trustee, the court may stay any proceeding to enforce a 
     lien against property of the plan or the sponsor or any other 
     suit against the plan or the sponsor.
       ``(2) Venue.--An action under this section may be brought 
     in the judicial district where the sponsor or the plan 
     administrator resides or does business or where any asset of 
     the plan is situated. A district court in which such action 
     is brought may issue process with respect to such action in 
     any other judicial district.
       ``(g) Personnel.--In accordance with regulations which 
     shall be prescribed by the Secretary through negotiated 
     rulemaking, the Secretary shall appoint, retain, and 
     compensate accountants, actuaries, and other professional 
     service personnel as may be necessary in connection with the 
     Secretary's service as trustee under this section.

     ``SEC. 811. STATE ASSESSMENT AUTHORITY.

       ``(a) In General.--Notwithstanding section 514, a State may 
     impose by law a contribution tax on an association health 
     plan described in section 806(a)(2), if the plan commenced 
     operations in such State after the date of the enactment of 
     the Bipartisan Patient Protection Act.
       ``(b) Contribution Tax.--For purposes of this section, the 
     term `contribution tax' imposed by a State on an association 
     health plan means any tax imposed by such State if--
       ``(1) such tax is computed by applying a rate to the amount 
     of premiums or contributions, with respect to individuals 
     covered under the plan who are residents of such State, which 
     are received by the plan from participating employers located 
     in such State or from such individuals;
       ``(2) the rate of such tax does not exceed the rate of any 
     tax imposed by such State on premiums or contributions 
     received by insurers or health maintenance organizations for 
     health insurance coverage offered in such State in connection 
     with a group health plan;
       ``(3) such tax is otherwise nondiscriminatory; and
       ``(4) the amount of any such tax assessed on the plan is 
     reduced by the amount of any tax or assessment otherwise 
     imposed by the State on premiums, contributions, or both 
     received by insurers or health maintenance organizations for 
     health insurance coverage,

[[Page H5252]]

     aggregate excess /stop loss insurance (as defined in section 
     806(g)(1)), specific excess /stop loss insurance (as defined 
     in section 806(g)(2)), other insurance related to the 
     provision of medical care under the plan, or any combination 
     thereof provided by such insurers or health maintenance 
     organizations in such State in connection with such plan.

     ``SEC. 812. DEFINITIONS AND RULES OF CONSTRUCTION.

       ``(a) Definitions.--For purposes of this part--
       ``(1) Group health plan.--The term `group health plan' has 
     the meaning provided in section 733(a)(1) (after applying 
     subsection (b) of this section).
       ``(2) Medical care.--The term `medical care' has the 
     meaning provided in section 733(a)(2).
       ``(3) Health insurance coverage.--The term `health 
     insurance coverage' has the meaning provided in section 
     733(b)(1).
       ``(4) Health insurance issuer.--The term `health insurance 
     issuer' has the meaning provided in section 733(b)(2).
       ``(5) Applicable authority.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     the term `applicable authority' means, in connection with an 
     association health plan--
       ``(i) the State recognized pursuant to subsection (c) of 
     section 506 as the State to which authority has been 
     delegated in connection with such plan; or
       ``(ii) if there if no State referred to in clause (i), the 
     Secretary.
       ``(B) Exceptions.--
       ``(i) Joint authorities.--Where such term appears in 
     section 808(3), section 807(e) (in the first instance), 
     section 809(a) (in the second instance), section 809(a) (in 
     the fourth instance), and section 809(b)(1), such term means, 
     in connection with an association health plan, the Secretary 
     and the State referred to in subparagraph (A)(i) (if any) in 
     connection with such plan.
       ``(ii) Regulatory authorities.--Where such term appears in 
     section 802(a) (in the first instance), section 802(d), 
     section 802(e), section 803(d), section 805(a)(5), section 
     806(a)(2), section 806(b), section 806(c), section 806(d), 
     paragraphs (1)(A) and (2)(A) of section 806(g), section 
     806(h), section 806(i), section 806(j), section 807(a) (in 
     the second instance), section 807(b), section 807(d), section 
     807(e) (in the second instance), section 808 (in the matter 
     after paragraph (3)), and section 809(a) (in the third 
     instance), such term means, in connection with an association 
     health plan, the Secretary.
       ``(6) Health status-related factor.--The term `health 
     status-related factor' has the meaning provided in section 
     733(d)(2).
       ``(7) Individual market.--
       ``(A) In general.--The term `individual market' means the 
     market for health insurance coverage offered to individuals 
     other than in connection with a group health plan.
       ``(B) Treatment of very small groups.--
       ``(i) In general.--Subject to clause (ii), such term 
     includes coverage offered in connection with a group health 
     plan that has fewer than 2 participants as current employees 
     or participants described in section 732(d)(3) on the first 
     day of the plan year.
       ``(ii) State exception.--Clause (i) shall not apply in the 
     case of health insurance coverage offered in a State if such 
     State regulates the coverage described in such clause in the 
     same manner and to the same extent as coverage in the small 
     group market (as defined in section 2791(e)(5) of the Public 
     Health Service Act) is regulated by such State.
       ``(8) Participating employer.--The term `participating 
     employer' means, in connection with an association health 
     plan, any employer, if any individual who is an employee of 
     such employer, a partner in such employer, or a self-employed 
     individual who is such employer (or any dependent, as defined 
     under the terms of the plan, of such individual) is or was 
     covered under such plan in connection with the status of such 
     individual as such an employee, partner, or self-employed 
     individual in relation to the plan.
       ``(9) Applicable state authority.--The term `applicable 
     State authority' means, with respect to a health insurance 
     issuer in a State, the State insurance commissioner or 
     official or officials designated by the State to enforce the 
     requirements of title XXVII of the Public Health Service Act 
     for the State involved with respect to such issuer.
       ``(10) Qualified actuary.--The term `qualified actuary' 
     means an individual who is a member of the American Academy 
     of Actuaries or meets such reasonable standards and 
     qualifications as the Secretary may provide by regulation 
     through negotiated rulemaking.
       ``(11) Affiliated member.--The term `affiliated member' 
     means, in connection with a sponsor--
       ``(A) a person who is otherwise eligible to be a member of 
     the sponsor but who elects an affiliated status with the 
     sponsor,
       ``(B) in the case of a sponsor with members which consist 
     of associations, a person who is a member of any such 
     association and elects an affiliated status with the sponsor, 
     or
       ``(C) in the case of an association health plan in 
     existence on the date of the enactment of the Bipartisan 
     Patient Protection Act, a person eligible to be a member of 
     the sponsor or one of its member associations.
       ``(12) Large employer.--The term `large employer' means, in 
     connection with a group health plan with respect to a plan 
     year, an employer who employed an average of at least 51 
     employees on business days during the preceding calendar year 
     and who employs at least 2 employees on the first day of the 
     plan year.
       ``(13) Small employer.--The term `small employer' means, in 
     connection with a group health plan with respect to a plan 
     year, an employer who is not a large employer.
       ``(b) Rules of Construction.--
       ``(1) Employers and employees.--For purposes of determining 
     whether a plan, fund, or program is an employee welfare 
     benefit plan which is an association health plan, and for 
     purposes of applying this title in connection with such plan, 
     fund, or program so determined to be such an employee welfare 
     benefit plan--
       ``(A) in the case of a partnership, the term `employer' (as 
     defined in section 3(5)) includes the partnership in relation 
     to the partners, and the term `employee' (as defined in 
     section 3(6)) includes any partner in relation to the 
     partnership; and
       ``(B) in the case of a self-employed individual, the term 
     `employer' (as defined in section 3(5)) and the term 
     `employee' (as defined in section 3(6)) shall include such 
     individual.
       ``(2) Plans, funds, and programs treated as employee 
     welfare benefit plans.--In the case of any plan, fund, or 
     program which was established or is maintained for the 
     purpose of providing medical care (through the purchase of 
     insurance or otherwise) for employees (or their dependents) 
     covered thereunder and which demonstrates to the Secretary 
     that all requirements for certification under this part would 
     be met with respect to such plan, fund, or program if such 
     plan, fund, or program were a group health plan, such plan, 
     fund, or program shall be treated for purposes of this title 
     as an employee welfare benefit plan on and after the date of 
     such demonstration.''.
       (b) Conforming Amendments to Preemption Rules.--
       (1) Section 514(b)(6) of such Act (29 U.S.C. 1144(b)(6)) is 
     amended by adding at the end the following new subparagraph:
       ``(E) The preceding subparagraphs of this paragraph do not 
     apply with respect to any State law in the case of an 
     association health plan which is certified under part 8.''.
       (2) Section 514 of such Act (29 U.S.C. 1144), as amended by 
     section 142, is amended--
       (A) in subsection (b)(4), by striking ``Subsection (a)'' 
     and inserting ``Subsections (a) and (e)'';
       (B) in subsection (b)(5), by striking ``subsection (a)'' in 
     subparagraph (A) and inserting ``subsection (a) of this 
     section and subsections (a)(2)(B) and (b) of section 805'', 
     and by striking ``subsection (a)'' in subparagraph (B) and 
     inserting ``subsection (a) of this section or subsection 
     (a)(2)(B) or (b) of section 805'';
       (C) by redesignating subsection (e) as subsection (f); and
       (D) by inserting after subsection (d) the following new 
     subsection:
       ``(e)(1) Except as provided in subsection (b)(4), the 
     provisions of this title shall supersede any and all State 
     laws insofar as they may now or hereafter preclude, or have 
     the effect of precluding, a health insurance issuer from 
     offering health insurance coverage in connection with an 
     association health plan which is certified under part 8.
       ``(2) Except as provided in paragraphs (4) and (5) of 
     subsection (b) of this section--
       ``(A) In any case in which health insurance coverage of any 
     policy type is offered under an association health plan 
     certified under part 8 to a participating employer operating 
     in such State, the provisions of this title shall supersede 
     any and all laws of such State insofar as they may preclude a 
     health insurance issuer from offering health insurance 
     coverage of the same policy type to other employers operating 
     in the State which are eligible for coverage under such 
     association health plan, whether or not such other employers 
     are participating employers in such plan.
       ``(B) In any case in which health insurance coverage of any 
     policy type is offered under an association health plan in a 
     State and the filing, with the applicable State authority, of 
     the policy form in connection with such policy type is 
     approved by such State authority, the provisions of this 
     title shall supersede any and all laws of any other State in 
     which health insurance coverage of such type is offered, 
     insofar as they may preclude, upon the filing in the same 
     form and manner of such policy form with the applicable State 
     authority in such other State, the approval of the filing in 
     such other State.
       ``(3) For additional provisions relating to association 
     health plans, see subsections (a)(2)(B) and (b) of section 
     805.
       ``(4) For purposes of this subsection, the term 
     `association health plan' has the meaning provided in section 
     801(a), and the terms `health insurance coverage', 
     `participating employer', and `health insurance issuer' have 
     the meanings provided such terms in section 811, 
     respectively.''.
       (3) Section 514(b)(6)(A) of such Act (29 U.S.C. 
     1144(b)(6)(A)) is amended--
       (A) in clause (i)(II), by striking ``and'' at the end;
       (B) in clause (ii), by inserting ``and which does not 
     provide medical care (within the meaning of section 
     733(a)(2)),'' after ``arrangement,'', and by striking 
     ``title.'' and inserting ``title, and''; and
       (C) by adding at the end the following new clause:
       ``(iii) subject to subparagraph (E), in the case of any 
     other employee welfare benefit plan which is a multiple 
     employer welfare

[[Page H5253]]

     arrangement and which provides medical care (within the 
     meaning of section 733(a)(2)), any law of any State which 
     regulates insurance may apply.''.
       (4) Section 514(e) of such Act (as redesignated by 
     paragraph (2)(C)) is amended--
       (A) by striking ``Nothing'' and inserting ``(1) Except as 
     provided in paragraph (2), nothing''; and
       (B) by adding at the end the following new paragraph:
       ``(2) Nothing in any other provision of law enacted on or 
     after the date of the enactment of the Bipartisan Patient 
     Protection Act shall be construed to alter, amend, modify, 
     invalidate, impair, or supersede any provision of this title, 
     except by specific cross-reference to the affected 
     section.''.
       (c) Plan Sponsor.--Section 3(16)(B) of such Act (29 U.S.C. 
     102(16)(B)) is amended by adding at the end the following new 
     sentence: ``Such term also includes a person serving as the 
     sponsor of an association health plan under part 8.''.
       (d) Disclosure of Solvency Protections Related to Self-
     Insured and Fully Insured Options Under Association Health 
     Plans.--Section 102(b) of such Act (29 U.S.C. 102(b)) is 
     amended by adding at the end the following: ``An association 
     health plan shall include in its summary plan description, in 
     connection with each benefit option, a description of the 
     form of solvency or guarantee fund protection secured 
     pursuant to this Act or applicable State law, if any.''.
       (e) Savings Clause.--Section 731(c) of such Act is amended 
     by inserting ``or part 8'' after ``this part''.
       (f) Report to the Congress Regarding Certification of Self-
     Insured Association Health Plans.--Not later than January 1, 
     2006, the Secretary of Labor shall report to the Committee on 
     Education and the Workforce of the House of Representatives 
     and the Committee on Health, Education, Labor, and Pensions 
     of the Senate the effect association health plans have had, 
     if any, on reducing the number of uninsured individuals.
       (g) Clerical Amendment.--The table of contents in section 1 
     of the Employee Retirement Income Security Act of 1974 is 
     amended by inserting after the item relating to section 734 
     the following new items:

           ``Part 8--Rules Governing Association Health Plans

``Sec. 801. Association health plans.
``Sec. 802. Certification of association health plans.
``Sec. 803. Requirements relating to sponsors and boards of trustees.
``Sec. 804. Participation and coverage requirements.
``Sec. 805. Other requirements relating to plan documents, contribution 
              rates, and benefit options.
``Sec. 806. Maintenance of reserves and provisions for solvency for 
              plans providing health benefits in addition to health 
              insurance coverage.
``Sec. 807. Requirements for application and related requirements.
``Sec. 808. Notice requirements for voluntary termination.
``Sec. 809. Corrective actions and mandatory termination.
``Sec. 810. Trusteeship by the Secretary of insolvent association 
              health plans providing health benefits in addition to 
              health insurance coverage.
``Sec. 811. State assessment authority.
``Sec. 812. Definitions and rules of construction.''.

     SEC. 422. CLARIFICATION OF TREATMENT OF SINGLE EMPLOYER 
                   ARRANGEMENTS.

       Section 3(40)(B) of the Employee Retirement Income Security 
     Act of 1974 (29 U.S.C. 1002(40)(B)) is amended--
       (1) in clause (i), by inserting ``for any plan year of any 
     such plan, or any fiscal year of any such other 
     arrangement;'' after ``single employer'', and by inserting 
     ``during such year or at any time during the preceding 1-year 
     period'' after ``control group'';
       (2) in clause (iii)--
       (A) by striking ``common control shall not be based on an 
     interest of less than 25 percent'' and inserting ``an 
     interest of greater than 25 percent may not be required as 
     the minimum interest necessary for common control''; and
       (B) by striking ``similar to'' and inserting ``consistent 
     and coextensive with'';
       (3) by redesignating clauses (iv) and (v) as clauses (v) 
     and (vi), respectively; and
       (4) by inserting after clause (iii) the following new 
     clause:
       ``(iv) in determining, after the application of clause (i), 
     whether benefits are provided to employees of two or more 
     employers, the arrangement shall be treated as having only 
     one participating employer if, after the application of 
     clause (i), the number of individuals who are employees and 
     former employees of any one participating employer and who 
     are covered under the arrangement is greater than 75 percent 
     of the aggregate number of all individuals who are employees 
     or former employees of participating employers and who are 
     covered under the arrangement;''.

     SEC. 423. CLARIFICATION OF TREATMENT OF CERTAIN COLLECTIVELY 
                   BARGAINED ARRANGEMENTS.

       (a) In General.--Section 3(40)(A)(i) of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 
     1002(40)(A)(i)) is amended to read as follows:
       ``(i)(I) under or pursuant to one or more collective 
     bargaining agreements which are reached pursuant to 
     collective bargaining described in section 8(d) of the 
     National Labor Relations Act (29 U.S.C. 158(d)) or paragraph 
     Fourth of section 2 of the Railway Labor Act (45 U.S.C. 152, 
     paragraph Fourth) or which are reached pursuant to labor-
     management negotiations under similar provisions of State 
     public employee relations laws, and (II) in accordance with 
     subparagraphs (C), (D), and (E);''.
       (b) Limitations.--Section 3(40) of such Act (29 U.S.C. 
     1002(40)) is amended by adding at the end the following new 
     subparagraphs:
       ``(C) For purposes of subparagraph (A)(i)(II), a plan or 
     other arrangement shall be treated as established or 
     maintained in accordance with this subparagraph only if the 
     following requirements are met:
       ``(i) The plan or other arrangement, and the employee 
     organization or any other entity sponsoring the plan or other 
     arrangement, do not--
       ``(I) utilize the services of any licensed insurance agent 
     or broker for soliciting or enrolling employers or 
     individuals as participating employers or covered individuals 
     under the plan or other arrangement; or
       ``(II) pay any type of compensation to a person, other than 
     a full time employee of the employee organization (or a 
     member of the organization to the extent provided in 
     regulations prescribed by the Secretary through negotiated 
     rulemaking), that is related either to the volume or number 
     of employers or individuals solicited or enrolled as 
     participating employers or covered individuals under the plan 
     or other arrangement, or to the dollar amount or size of the 
     contributions made by participating employers or covered 
     individuals to the plan or other arrangement;

     except to the extent that the services used by the plan, 
     arrangement, organization, or other entity consist solely of 
     preparation of documents necessary for compliance with the 
     reporting and disclosure requirements of part 1 or 
     administrative, investment, or consulting services unrelated 
     to solicitation or enrollment of covered individuals.
       ``(ii) As of the end of the preceding plan year, the number 
     of covered individuals under the plan or other arrangement 
     who are neither--
       ``(I) employed within a bargaining unit covered by any of 
     the collective bargaining agreements with a participating 
     employer (nor covered on the basis of an individual's 
     employment in such a bargaining unit); nor
       ``(II) present employees (or former employees who were 
     covered while employed) of the sponsoring employee 
     organization, of an employer who is or was a party to any of 
     the collective bargaining agreements, or of the plan or other 
     arrangement or a related plan or arrangement (nor covered on 
     the basis of such present or former employment);

     does not exceed 15 percent of the total number of individuals 
     who are covered under the plan or arrangement and who are 
     present or former employees who are or were covered under the 
     plan or arrangement pursuant to a collective bargaining 
     agreement with a participating employer. The requirements of 
     the preceding provisions of this clause shall be treated as 
     satisfied if, as of the end of the preceding plan year, such 
     covered individuals are comprised solely of individuals who 
     were covered individuals under the plan or other arrangement 
     as of the date of the enactment of the Bipartisan Patient 
     Protection Act and, as of the end of the preceding plan year, 
     the number of such covered individuals does not exceed 25 
     percent of the total number of present and former employees 
     enrolled under the plan or other arrangement.
       ``(iii) The employee organization or other entity 
     sponsoring the plan or other arrangement certifies to the 
     Secretary each year, in a form and manner which shall be 
     prescribed by the Secretary through negotiated rulemaking 
     that the plan or other arrangement meets the requirements of 
     clauses (i) and (ii).
       ``(D) For purposes of subparagraph (A)(i)(II), a plan or 
     arrangement shall be treated as established or maintained in 
     accordance with this subparagraph only if--
       ``(i) all of the benefits provided under the plan or 
     arrangement consist of health insurance coverage; or
       ``(ii)(I) the plan or arrangement is a multiemployer plan; 
     and
       ``(II) the requirements of clause (B) of the proviso to 
     clause (5) of section 302(c) of the Labor Management 
     Relations Act, 1947 (29 U.S.C. 186(c)) are met with respect 
     to such plan or other arrangement.
       ``(E) For purposes of subparagraph (A)(i)(II), a plan or 
     arrangement shall be treated as established or maintained in 
     accordance with this subparagraph only if--
       ``(i) the plan or arrangement is in effect as of the date 
     of the enactment of the Bipartisan Patient Protection Act; or
       ``(ii) the employee organization or other entity sponsoring 
     the plan or arrangement--
       ``(I) has been in existence for at least 3 years; or
       ``(II) demonstrates to the satisfaction of the Secretary 
     that the requirements of subparagraphs (C) and (D) are met 
     with respect to the plan or other arrangement.''.
       (c) Conforming Amendments to Definitions of Participant and 
     Beneficiary.--Section 3(7) of such Act (29 U.S.C. 1002(7)) is 
     amended by adding at the end the following new sentence: 
     ``Such term includes an individual who is a covered 
     individual described in paragraph (40)(C)(ii).''.

[[Page H5254]]

     SEC. 424. ENFORCEMENT PROVISIONS RELATING TO ASSOCIATION 
                   HEALTH PLANS.

       (a) Criminal Penalties for Certain Willful 
     Misrepresentations.--Section 501 of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1131) is amended--
       (1) by inserting ``(a)'' after ``Sec. 501.''; and
       (2) by adding at the end the following new subsection:
       ``(b) Any person who willfully falsely represents, to any 
     employee, any employee's beneficiary, any employer, the 
     Secretary, or any State, a plan or other arrangement 
     established or maintained for the purpose of offering or 
     providing any benefit described in section 3(1) to employees 
     or their beneficiaries as--
       ``(1) being an association health plan which has been 
     certified under part 8;
       ``(2) having been established or maintained under or 
     pursuant to one or more collective bargaining agreements 
     which are reached pursuant to collective bargaining described 
     in section 8(d) of the National Labor Relations Act (29 
     U.S.C. 158(d)) or paragraph Fourth of section 2 of the 
     Railway Labor Act (45 U.S.C. 152, paragraph Fourth) or which 
     are reached pursuant to labor-management negotiations under 
     similar provisions of State public employee relations laws; 
     or
       ``(3) being a plan or arrangement with respect to which the 
     requirements of subparagraph (C), (D), or (E) of section 
     3(40) are met;
     shall, upon conviction, be imprisoned not more than 5 years, 
     be fined under title 18, United States Code, or both.''.
       (b) Cease Activities Orders.--Section 502 of such Act (29 
     U.S.C. 1132), as amended by sections 141 and 143, is further 
     amended by adding at the end the following new subsection:
       ``(p) Association Health Plan Cease and Desist Orders.--
       ``(1) In general.--Subject to paragraph (2), upon 
     application by the Secretary showing the operation, 
     promotion, or marketing of an association health plan (or 
     similar arrangement providing benefits consisting of medical 
     care (as defined in section 733(a)(2))) that--
       ``(A) is not certified under part 8, is subject under 
     section 514(b)(6) to the insurance laws of any State in which 
     the plan or arrangement offers or provides benefits, and is 
     not licensed, registered, or otherwise approved under the 
     insurance laws of such State; or
       ``(B) is an association health plan certified under part 8 
     and is not operating in accordance with the requirements 
     under part 8 for such certification,

     a district court of the United States shall enter an order 
     requiring that the plan or arrangement cease activities.
       ``(2) Exception.--Paragraph (1) shall not apply in the case 
     of an association health plan or other arrangement if the 
     plan or arrangement shows that--
       ``(A) all benefits under it referred to in paragraph (1) 
     consist of health insurance coverage; and
       ``(B) with respect to each State in which the plan or 
     arrangement offers or provides benefits, the plan or 
     arrangement is operating in accordance with applicable State 
     laws that are not superseded under section 514.
       ``(3) Additional equitable relief.--The court may grant 
     such additional equitable relief, including any relief 
     available under this title, as it deems necessary to protect 
     the interests of the public and of persons having claims for 
     benefits against the plan.''.
       (c) Responsibility for Claims Procedure.--Section 503 of 
     such Act (29 U.S.C. 1133), as amended by section 301(b), is 
     amended by adding at the end the following new subsection:
       ``(c) Association Health Plans.--The terms of each 
     association health plan which is or has been certified under 
     part 8 shall require the board of trustees or the named 
     fiduciary (as applicable) to ensure that the requirements of 
     this section are met in connection with claims filed under 
     the plan.''.

     SEC. 425. COOPERATION BETWEEN FEDERAL AND STATE AUTHORITIES.

       Section 506 of the Employee Retirement Income Security Act 
     of 1974 (29 U.S.C. 1136) is amended by adding at the end the 
     following new subsection:
       ``(c) Consultation With States With Respect to Association 
     Health Plans.--
       ``(1) Agreements with states.--The Secretary shall consult 
     with the State recognized under paragraph (2) with respect to 
     an association health plan regarding the exercise of--
       ``(A) the Secretary's authority under sections 502 and 504 
     to enforce the requirements for certification under part 8; 
     and
       ``(B) the Secretary's authority to certify association 
     health plans under part 8 in accordance with regulations of 
     the Secretary applicable to certification under part 8.
       ``(2) Recognition of primary domicile state.--In carrying 
     out paragraph (1), the Secretary shall ensure that only one 
     State will be recognized, with respect to any particular 
     association health plan, as the State to with which 
     consultation is required. In carrying out this paragraph, the 
     Secretary shall take into account the places of residence of 
     the participants and beneficiaries under the plan and the 
     State in which the trust is maintained.''.

     SEC. 426. EFFECTIVE DATE AND TRANSITIONAL AND OTHER RULES.

       (a) Effective Date.--The amendments made by sections 421, 
     424, and 425 shall take effect one year from the date of 
     enactment. The amendments made by sections 422 and 423 shall 
     take effect on the date of the enactment of this Act. The 
     Secretary of Labor shall first issue all regulations 
     necessary to carry out the amendments made by this subtitle 
     within one year from the date of enactment. Such regulations 
     shall be issued through negotiated rulemaking.
       (b) Exception.--Section 801(a)(2) of the Employee 
     Retirement Income Security Act of 1974 (added by section 421) 
     does not apply in connection with an association health plan 
     (certified under part 8 of subtitle B of title I of such Act) 
     existing on the date of the enactment of this Act, if no 
     benefits provided thereunder as of the date of the enactment 
     of this Act consist of health insurance coverage (as defined 
     in section 733(b)(1) of such Act).
       (c) Treatment of Certain Existing Health Benefits 
     Programs.--
       (1) In general.--In any case in which, as of the date of 
     the enactment of this Act, an arrangement is maintained in a 
     State for the purpose of providing benefits consisting of 
     medical care for the employees and beneficiaries of its 
     participating employers, at least 200 participating employers 
     make contributions to such arrangement, such arrangement has 
     been in existence for at least 10 years, and such arrangement 
     is licensed under the laws of one or more States to provide 
     such benefits to its participating employers, upon the filing 
     with the applicable authority (as defined in section 
     812(a)(5) of the Employee Retirement Income Security Act of 
     1974 (as amended by this subtitle)) by the arrangement of an 
     application for certification of the arrangement under part 8 
     of subtitle B of title I of such Act--
       (A) such arrangement shall be deemed to be a group health 
     plan for purposes of title I of such Act;
       (B) the requirements of sections 801(a)(1) and 803(a)(1) of 
     the Employee Retirement Income Security Act of 1974 shall be 
     deemed met with respect to such arrangement;
       (C) the requirements of section 803(b) of such Act shall be 
     deemed met, if the arrangement is operated by a board of 
     directors which--
       (i) is elected by the participating employers, with each 
     employer having one vote; and
       (ii) has complete fiscal control over the arrangement and 
     which is responsible for all operations of the arrangement;
       (D) the requirements of section 804(a) of such Act shall be 
     deemed met with respect to such arrangement; and
       (E) the arrangement may be certified by any applicable 
     authority with respect to its operations in any State only if 
     it operates in such State on the date of certification.

     The provisions of this subsection shall cease to apply with 
     respect to any such arrangement at such time after the date 
     of the enactment of this Act as the applicable requirements 
     of this subsection are not met with respect to such 
     arrangement.
       (2) Definitions.--For purposes of this subsection, the 
     terms ``group health plan'', ``medical care'', and 
     ``participating employer'' shall have the meanings provided 
     in section 812 of the Employee Retirement Income Security Act 
     of 1974, except that the reference in paragraph (7) of such 
     section to an ``association health plan'' shall be deemed a 
     reference to an arrangement referred to in this subsection.
       Amend section 511 to read as follows (and conform the table 
     of contents accordingly):

     SEC. 511. EXPANSION OF AVAILABILITY OF ARCHER MEDICAL SAVINGS 
                   ACCOUNTS.

       (a) Repeal of Limitations on Number of Medical Savings 
     Accounts.--
       (1) In general.--Subsections (i) and (j) of section 220 of 
     the Internal Revenue Code of 1986 are hereby repealed.
       (2) Conforming amendments.--
       (A) Paragraph (1) of section 220(c) of such Code is amended 
     by striking subparagraph (D).
       (B) Section 138 of such Code is amended by striking 
     subsection (f).
       (b) Availability Not Limited to Accounts for Employees of 
     Small Employers and Self-employed Individuals.--
       (1) In general.--Subparagraph (A) of section 220(c)(1) of 
     such Code (relating to eligible individual) is amended to 
     read as follows:
       ``(A) In general.--The term `eligible individual' means, 
     with respect to any month, any individual if--
       ``(i) such individual is covered under a high deductible 
     health plan as of the 1st day of such month, and
       ``(ii) such individual is not, while covered under a high 
     deductible health plan, covered under any health plan--

       ``(I) which is not a high deductible health plan, and
       ``(II) which provides coverage for any benefit which is 
     covered under the high deductible health plan.''.

       (2) Conforming amendments.--
       (A) Section 220(c)(1) of such Code is amended by striking 
     subparagraph (C).
       (B) Section 220(c) of such Code is amended by striking 
     paragraph (4) (defining small employer) and by redesignating 
     paragraph (5) as paragraph (4).
       (C) Section 220(b) of such Code is amended by striking 
     paragraph (4) (relating to deduction limited by compensation) 
     and by redesignating paragraphs (5), (6), and (7) as 
     paragraphs (4), (5), and (6), respectively.
       (c) Increase in Amount of Deduction Allowed for 
     Contributions to Medical Savings Accounts.--
       (1) In general.--Paragraph (2) of section 220(b) of such 
     Code is amended to read as follows:
       ``(2) Monthly limitation.--The monthly limitation for any 
     month is the amount

[[Page H5255]]

     equal to \1/12\ of the annual deductible (as of the first day 
     of such month) of the individual's coverage under the high 
     deductible health plan.''.
       (2) Conforming amendment.--Clause (ii) of section 
     220(d)(1)(A) of such Code is amended by striking ``75 percent 
     of''.
       (d) Both Employers and Employees May Contribute to Medical 
     Savings Accounts.--Paragraph (4) of section 220(b) of such 
     Code (as redesignated by subsection (b)(2)(C)) is amended to 
     read as follows:
       ``(4) Coordination with exclusion for employer 
     contributions.--The limitation which would (but for this 
     paragraph) apply under this subsection to the taxpayer for 
     any taxable year shall be reduced (but not below zero) by the 
     amount which would (but for section 106(b)) be includible in 
     the taxpayer's gross income for such taxable year.''.
       (e) Reduction of Permitted Deductibles Under High 
     Deductible Health Plans.--
       (1) In general.--Subparagraph (A) of section 220(c)(2) of 
     such Code (defining high deductible health plan) is amended--
       (A) by striking ``$1,500'' in clause (i) and inserting 
     ``$1,000''; and
       (B) by striking ``$3,000'' in clause (ii) and inserting 
     ``$2,000''.
       (2) Conforming amendment.--Subsection (g) of section 220 of 
     such Code is amended to read as follows:
       ``(g) Cost-of-Living Adjustment.--
       ``(1) In general.--In the case of any taxable year 
     beginning in a calendar year after 1998, each dollar amount 
     in subsection (c)(2) shall be increased by an amount equal 
     to--
       ``(A) such dollar amount, multiplied by
       ``(B) the cost-of-living adjustment determined under 
     section 1(f)(3) for the calendar year in which such taxable 
     year begins by substituting `calendar year 1997' for 
     `calendar year 1992' in subparagraph (B) thereof.
       ``(2) Special rules.--In the case of the $1,000 amount in 
     subsection (c)(2)(A)(i) and the $2,000 amount in subsection 
     (c)(2)(A)(ii), paragraph (1)(B) shall be applied by 
     substituting `calendar year 2000' for `calendar year 1997'.
       ``(3) Rounding.--If any increase under paragraph (1) or (2) 
     is not a multiple of $50, such increase shall be rounded to 
     the nearest multiple of $50.''.
       (f) Providing Incentives for Preferred Provider 
     Organizations To Offer Medical Savings Accounts.--
       (1) Preventive care coverage permitted.--Clause (ii) of 
     section 220(c)(2)(B) of such Code is amended by striking 
     ``preventive care if'' and all that follows and inserting 
     ``preventive care.''
       (2) Treatment of network services.--Subparagraph (B) of 
     section 220(c)(2) of such Code is amended by adding at the 
     end the following new clause:
       ``(iii) Treatment of network services.--In the case of a 
     health plan which provides benefits for services provided by 
     providers in a network (as defined in section 161 of the 
     Patient's Bill of Rights Act of 2001) and which would 
     (without regard to services provided by providers outside the 
     network) be a high deductible health plan, such plan shall 
     not fail to be a high deductible health plan because--

       ``(I) the annual deductible for services provided by 
     providers outside the network exceeds the applicable maximum 
     dollar amount in clause (i) or (ii), or
       ``(II) the annual out-of-pocket expenses required to be 
     paid for services provided by providers outside the network 
     exceeds the applicable dollar amount in clause (iii).

     The annual deductible taken into account under subsection 
     (b)(2) with respect to a plan to which the preceding sentence 
     applies shall be the annual deductible for services provided 
     by providers within the network.''
       (g) Medical Savings Accounts May Be Offered Under Cafeteria 
     Plans.--Subsection (f) of section 125 of such Code is amended 
     by striking ``106(b),''.
       (h) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2001.

  The CHAIRMAN. Pursuant to House Resolution 219, the gentleman from 
California (Mr. Thomas) and a Member opposed each will control 20 
minutes.
  The Chair recognizes the gentleman from California (Mr. Thomas).
  Mr. THOMAS. Mr. Chairman, I yield myself such time as I may consume.
  Mr. Chairman, this amendment has two major provisions, one dealing 
with an attempt, since we know that the Patients' Bill of Rights and 
the expenses associated with the albeit appropriate and necessary 
structural procedure of due process and potential litigation will cost 
additional dollars and, therefore, will have some negative impact on 
the number of folks who are insured, we believe that it is necessary to 
go forward. That is why this amendment is offered.
  This amendment contains two significant provisions that we believe 
will significantly enhance the opportunity to retain the insurance that 
is available for individuals for health insurance today and, perhaps, 
even enhance it based upon the creative approach in this amendment.
  The first provisions are called medical savings accounts, and in 
honor of the former chairman of the Committee on Ways and Means, these 
have become known as Archer MSAs.
  The problem with the Archer MSAs was that they were not permanent. 
They were not a viable insurance product, and notwithstanding recent 
polls that show that up to 90 percent of Americans believe these are 
necessary and appropriate, especially among that group that is the 
least insured with health insurance, the 18- to 29-year-olds who have 
that 91 percent desirability for this insurance, the structure of MSAs 
has been such that it does not work.
  Mr. Chairman, this amendment refines medical savings accounts to 
produce a viable insurance product.
  Mr. Chairman, I reserve the balance of my time.
  Mr. THOMAS. Mr. Chairman, I ask unanimous consent to yield the 
balance of my time to the gentleman from Texas (Mr. Sam Johnson) to 
control the time.
  The CHAIRMAN. Is there objection to the request of the gentleman from 
California?
  There was no objection.
  The CHAIRMAN. The gentleman from California (Mr. Stark) claims the 
time in opposition.
  Mr. STARK. Mr. Chairman, I ask unanimous consent to allocate 10 
minutes to the gentleman from New Jersey (Mr. Andrews).
  The CHAIRMAN. Is there objection to the request of the gentleman from 
California?
  There was no objection.
  Mr. STARK. Mr. Chairman, I yield 2 minutes to myself.
  Mr. Chairman, this is an old dead horse which for some reason has 
been revived again. Medical savings accounts have not worked in the 
private market and did not work when they were offered to Medicare 
beneficiaries. They did not sell one policy under Medicare. This 
provision comes with a price tag of nearly $5 billion over 10 years, 
and all that can be said is, ``There they go again, the Republicans 
giving a tax cut to the very rich.''
  Mr. Chairman, the American Academy of Actuaries said the greatest 
savings from MSAs will be for the employees who have little or no 
health expenditures; and the greatest losses will be for those 
employees with substantial health care expenditures. Those with high 
expenditures are primarily older employees and pregnant women.
  The Wall Street Journal article explaining the lack of demand for 
MSAs stated that consumers using MSAs must generally pay full price for 
medical services, while managed care plans get discounts of 30 to 60 
percent. MSAs discourage preventive care, which leads to more serious 
health costs. MSAs do not work.
  Mr. Chairman, why we should be increasing the ability of very rich 
people to have a second IRA and deny health care or raise the cost of 
health care for other workers escapes me. This is an amendment, 
laughable at best, proposed by people who think that they can buy some 
more votes by pandering to the very rich by giving away more tax 
deductions.

                              {time}  1730

  I might say that in the previous debate today, people talked about 
raising the cost of health insurance. There is not one credible, 
independent study ever conducted that shows the number of uninsured 
Americans would go up if we passed the Patients' Bill of Rights. I 
challenge the Republicans to show me such a study.
  Mr. SAM JOHNSON of Texas. Mr. Chairman, I yield 1 minute to the 
gentlewoman from New York (Mrs. Kelly).
  Mrs. KELLY. Mr. Chairman, I rise today in strong support of the 
amendment offered by my colleagues. There are millions of Americans 
without health coverage, and they live in every one of our districts. 
We hear from them every day. One provision that is poised to have a 
tremendous impact on reducing the number of uninsured is association 
health plans.
  I have heard some of my colleagues contend that AHPs are bad for 
women. Bad for women? How is affordable health coverage bad for women? 
Association health plans offer another tool for women to access 
affordable health insurance. Currently, small business owners, their 
families and their employees make up over 60 percent of the uninsured. 
Over half of these people are women. This is a no-brainer. AHPs are

[[Page H5256]]

good for women. In fact, AHPs are strongly supported by the National 
Association of Women Business Owners, Women Impacting Public Policy, in 
addition to a host of other groups committed to increasing access to 
health care for hardworking women Americans.
  Many small businesses do not have the ability to negotiate affordable 
health care prices the way big companies can. I think we should give 
them an opportunity to level this playing field.
  I urge all of my colleagues to remember the women and uninsured of 
America and adopt this amendment.
  Mr. STARK. Mr. Chairman, I yield myself such time as I may consume. I 
ask the gentlewoman from New York if she would care to respond to a 
question and answer for me if she knows of any women's group in the 
United States that endorses this outside of perhaps the Eagle Forum.
  Mrs. KELLY. If the gentleman will yield, Mr. Chairman, I am sorry, 
perhaps the gentleman was not listening. Yes. The National Association 
of Women Business Owners and the Women Impacting Public Policy both. 
That is only two. There are others.
  Mr. STARK. There are?
  Mrs. KELLY. Yes.
  Mr. STARK. Which others?
  Mrs. KELLY. I do not have a list of them in my hand, but there are 
others.
  Mr. STARK. I thank the gentlewoman.
  Mr. Chairman, I yield 1\1/2\ minutes to the gentleman from Wisconsin 
(Mr. Kleczka).
  Mr. KLECZKA. Mr. Chairman, I rise in strong opposition to this 
amendment, especially the portion dealing with medical savings 
accounts. What are those? We all know about retirement savings 
accounts, IRAs; we know about education savings accounts putting money 
away for your child's education. Now we have medical savings accounts.
  My question to the proponents is, where are individuals going to get 
all this money to slug into these various accounts? You have got to pay 
the mortgage, your gas bill, your heat bill and now you are supposed to 
have all this money left over to give to your IRA, your education IRA 
and then a medical IRA.
  Mr. Chairman, if this passes and becomes law, this is the death knell 
for employer-sponsored insurance. I say that because only the healthy 
and the wealthy will be able to put money into medical savings 
accounts, leaving the rest of us and the sick, to pull the wagon. What 
will happen is rates will go up, employers will cancel their plan and 
say, You will have to go into a medical savings account. I can't afford 
this anymore.
  Just to prove my point, the author of the amendment, Mr. Thomas the 
chairman of the Committee on Ways and Means, said in March of 1998, 
that it would be not surprising if a health care package uses the Tax 
Code to get rid of the employer-sponsored insurance system.''
  Mr. Chairman, we see it is right here today and if this passes, say 
good-bye to your employer-sponsored health insurance because the rates 
are going to be too high for employers to keep it. Again, this plan is 
for the healthy and wealthy.
  Mr. SAM JOHNSON of Texas. Mr. Chairman, I yield 1 minute to the 
gentleman from Georgia (Mr. Norwood).
  Mr. NORWOOD. I thank the gentleman for yielding time.
  Mr. Chairman, it is interesting to follow the previous speaker, 
because medical savings accounts hold the best promise for allowing 
Americans to break out of managed care entirely and take control of 
their own health care for the first time in many years. I do not have 
time to go into this a lot, but some of the most serious, real problems 
faced today by medical savings account companies is that a far higher 
mix of seriously ill patients are flocking into MSAs than other health 
plans, to the point that negative selection is currently hurting MSAs, 
not traditional insurance. The reason so many people with preexisting 
conditions are flocking to MSAs is that MSAs provide freedom, freedom 
to get the drug your doctor ordered, freedom to see your specialist 
without seeking permission from anyone or to have to file an appeal for 
an overturn.
  I urge my colleagues to support this amendment for medical savings 
accounts because I think that it will help all of us do one of the 
things I have been trying to do all along, is get away from managed 
care.
  Mr. STARK. Mr. Chairman, I am happy to yield 1\1/2\ minutes to the 
distinguished gentleman from Maryland (Mr. Cardin).
  Mr. CARDIN. Mr. Chairman, as the sponsor of the amendment pointed 
out, this amendment deals with two points: one is medical savings 
accounts, the other is association health plans. I want to deal with 
the second issue, because I think it will have the unintended 
consequence of actually increasing the number of uninsured, not 
increasing the number of insured.
  Let me just give you an example. In my State of Maryland, we have 
already had small market reform. Small companies can already join a 
state-regulated plan that is much less expensive than on the open 
market. If we are to adopt the associated health plan that is in this 
amendment, it will be the death knell for the small market reform in 
the State of Maryland.
  Maryland is not alone. Other States have done the same thing. The 
reason quite frankly is the success of the Maryland small market reform 
is based upon all small employers coming into the Maryland plan, not 
picking and choosing between different plans. If we allow the 
associated health plans, that means there will be less companies 
insured in the State of Maryland. Do not take my word for it; take the 
word of Steve Larsen, the insurance commissioner for the State of 
Maryland, who is urging us not to pass this amendment and points out 
that the National Association of Insurance Commissioners oppose this 
amendment.
  I would urge my colleagues to reject this amendment because it will 
increase the number of uninsured and reduce the opportunity for small 
companies in this country.
  Mr. SAM JOHNSON of Texas. Mr. Chairman, I yield 1\1/2\ minutes to the 
gentleman from Wisconsin (Mr. Ryan).
  Mr. RYAN of Wisconsin. Mr. Chairman, I thank the gentleman for 
yielding time. I am curious as I watch this debate over medical savings 
accounts from the other side, if you are so much against MSAs, then why 
do you expand MSAs in your own bill? The Ganske-Dingell bill has 
medical savings accounts expansion and extension of them in their own 
legislation. So if they are so rotten, why are you advocating them in 
your own legislation?
  Mr. Chairman, what this bill is about is whether or not we are going 
to improve the quality of health care for all Americans. That is the 
sole purpose of this bill. What this amendment gives us a chance to do 
is determine whether or not we can also improve the accessibility and 
affordability of health care. We all know that health care is getting 
too expensive, that it is inaccessible for too many people. This bill 
will do many great things to improve the quality of health care, but we 
need to work on making it more affordable for working families and we 
need to make it more accessible.
  Association health plans, which is also in this amendment which is 
being ignored right now, allows the small little guy, the small 
businesses to band together to jointly purchase health insurance so 
they can get that big volume discount purchasing power that the big 
companies have. That is what we are accomplishing in this. We are 
giving small businesses, where 85 percent of the working family works 
for, the chance to get the same kind of health insurance deals that 
large corporations do, making health care more accessible and more 
affordable. Medical savings accounts as validated in the opposition's 
bill also expands freedom of choice in health care.
  Mr. STARK. Mr. Chairman, I yield 1\1/2\ minutes to the gentleman from 
California (Mr. Becerra).
  Mr. BECERRA. Mr. Chairman, I thank the gentleman for yielding me this 
time.
  My wife always tells me that as she was going through medical school, 
the axiom that they always were told to remember was ``do no harm.'' If 
you are going to go out there and be a physician and treat people, 
remember that if nothing else, you try to do no harm.
  I do not understand why, if that is what doctors rely upon as they 
continue their career and their practice to try to heal and help, why 
we all of a

[[Page H5257]]

sudden have to go against all those good physicians, all those good 
health care providers who are saying, please, do no harm to the 
Patients' Bill of Rights that we had, the same bill that last year got 
some 270 votes from the same Chamber. Why did we have to go into the 
back room and do this harm through these damaging three amendments that 
we have here before us? Why is it that we have to strip the 
accountability from the bill that would make sure that HMOs and 
insurance plans provide what patients want, the accountability. If you 
do harm to them, they have the right to go after you to get a remedy. 
Why is it that we strip away from those patients who are injured or 
perhaps even killed the ability to go after those who committed 
malpractice? Why? This is our chance to tell the American public that 
we believe, just as doctors do, that we should do no harm.
  We have a great base bill before us. We should follow what we did 
last year. We should have the bipartisan vote that gave us 271 people 
in this same House of Representatives to vote for it and move forward 
and have what the American people want, a bill that will do no harm. 
Unfortunately, these amendments are killer, poison amendments. Please 
vote against all three of these amendments that are coming up and vote 
for the Dingell bill which is the true Patients' Bill of Rights.
  Mr. SAM JOHNSON of Texas. Mr. Chairman, I yield 1 minute to the 
gentleman from Pennsylvania (Mr. English), a member of the Committee on 
Ways and Means.
  Mr. ENGLISH. Mr. Chairman, in 1996 Congress provided patients with 
options to save for their health care needs and manage their own health 
care needs by creating medical savings accounts. But certain 
limitations placed on those accounts never allowed patients to fully 
realize the promise of MSAs.
  Today, I urge my colleagues to make those accounts permanent and 
repeal the limitations put on them by supporting this amendment, this 
pro-consumer amendment. This amendment allows any size company to offer 
MSAs and also allows individuals to purchase MSAs, giving more people 
the power to choose the health care professionals, services and 
products that best meet their needs as individuals. It allows MSAs to 
be offered under cafeteria plans that will greatly expand the number of 
consumers that can be reached by MSAs and treat MSAs like other health 
care plans.
  Many insurers have been reluctant to offer medical savings accounts 
because the cap limits the size of the market in which MSAs can be 
offered. We would repeal that cap. That is fundamentally pro-consumer 
legislation.
  Mr. STARK. Mr. Chairman, I am happy to yield 2\1/2\ minutes to the 
gentleman from North Dakota (Mr. Pomeroy), a former insurance 
commissioner of that fine State.
  Mr. POMEROY. Mr. Chairman, I thank the gentleman for yielding time.
  Back home we say you can take a pig, put lipstick on it, smell it and 
call it Monique, but it is still a pig. AHPs, association health plans, 
contained in this bill are just another iteration of what has been 
tried in the past and failed in the past to the disadvantage of small 
employers and their employees: multiple employer trusts in the early 
1980s, giving way to multiple employer welfare arrangements in the late 
1980s.
  What these were were efforts to have unregulated insurance pools 
across small employers managed by associations. The net result, no 
regulation, no adequate oversight in terms of capitalization of these 
programs; and while the premiums were cheap, when the claims came in, 
the companies were not there. It is not just a matter of having a 
policy for purposes of having access to coverage. You want to make sure 
you actually have a solvent entity to pay the claim when you send in 
the bill. That is the problem about deregulating these association 
health plans. We have learned this lesson once. We have learned this 
lesson twice. Why, oh why, oh why on a bill that we are trying to 
increase consumer protections would the majority ask us to learn it yet 
a third time to the disadvantage again of small employers and the 
people covered in those programs?
  There is another adverse feature to association health plans and that 
is that it busts up the risk pool. The way health insurance works is 
you get a whole lot of folks, healthy ones, medium healthy ones, sick 
ones, you put all their risks together and then you have a mechanism 
that can pay claims on those who incur medical services. This would 
segment out by attracting disproportionately healthy groups least 
likely to incur medical services. Everybody else would be in groups 
that are aging, groups whose health experience was deteriorating, and 
the premiums would be skyrocketing.

                              {time}  1745

  Do not take my word for it, because the Congressional Budget Office 
has evaluated this, and the Congressional Budget Office said if AHPs 
were enacted, four in five workers in small firms, 20 million 
Americans, would actually receive a rate increase. Only 4.6 million 
would receive a rate decrease. Why would you have rates go up by a 
feature of four to one in order to advance Association Health Plans?
  It is a bad idea. It is not consumer protection, it is consumer harm. 
Reject that amendment.
  Mr. SAM JOHNSON of Texas. Mr. Chairman, our opinion is that those 
health plans give people insurance, and they do lower the cost.
  Mr. Chairman, I yield 30 seconds to the gentlewoman from Connecticut 
(Mrs. Johnson), a member of the Committee on Ways and Means.
  Mrs. JOHNSON of Connecticut. Mr. Chairman, I just would like to point 
out to my colleagues that in this bill there are solvency standards and 
a number of reforms that were not in there a number of years ago. What 
is exciting about the Association Health Plan option is it provides to 
small businesses the opportunity to offer health plans out from under 
State mandates, which is exactly what the larger employers have done. 
My constituents tell me that if they could organize their small 
business plans under the ERISA law, they could lower premiums 10 
percent.
  Mr. STARK. Mr. Chairman, I yield myself the balance of my time.
  The CHAIRMAN. The gentleman from California is recognized for 30 
seconds.
  Mr. STARK. Mr. Chairman, the gentleman from North Dakota (Mr. 
Pomeroy) asked, ``Why would anybody do this?'' I would answer that the 
one need just to look at Golden Rule Financial's contributions to find 
the answer: soft money, 1997 to 1998, $314,000 to the Republicans, and 
not a penny to the Democrats. Under this amendment, Golden Rule 
Insurance Company, the main company that benefits from MSAs, will get 
$5 billion over the next 10 years.
  You guys are selling out too cheap to these lobbyists. You have taken 
their $300,000 and given them a bill worth 5 billion. That is what the 
Republicans are doing in this bill. They have sold out to the special 
interests; they have sold out to the insurance companies. Shame on you.
  Mr. SAM JOHNSON of Texas. Shame on the trial lawyers who are trying 
to win millions of dollars on your bill.
  Mr. Chairman, I yield 1 minute to the gentleman from South Dakota 
(Mr. Thune).
  Mr. THUNE. Mr. Chairman, I thank the gentleman for yielding me time.
  Let me say, Mr. Chairman, that we need strong patient protection 
legislation. We have before us a bill that will do that, will provide 
access to emergency room, access to clinical trials, direct access for 
women to OB-Gyn and access to the courts for wrongful treatment.
  But this amendment does something more. This amendment improves this 
legislation by expanding access to health care. There are 86,000 people 
in my State of South Dakota who do not have health care. Medical 
savings accounts and association health plans are a means by which our 
small businesses can make health care more affordable and more 
accessible to more people.
  This is a good amendment, Mr. Chairman. We need to act on this 
amendment, act on this legislation, provide strong patient protection 
for people in this country, but also do something to address those who 
are uninsured, the many people across this country and those in my 
State of South Dakota who do not have access to health care today.
  Let us enact the Thomas-Lipinski-Fletcher amendment and give more

[[Page H5258]]

people more access to health care that is affordable by increasing and 
expanding MSAs and association health plans.
  Mr. ANDREWS. Mr. Chairman, I yield myself such time as I may consume.
  Mr. Chairman, this amendment is very much in keeping in theme with 
the message today from the majority, which is illusions. The Norwood 
amendment creates the illusion of holding HMOs accountable for their 
misconduct, and we will discuss that in greater detail in the next 
amendment. This amendment creates the illusion of covering more of the 
uninsured Americans with health insurance. It is a remarkable miss of 
the target that we should be aiming at.
  We hear a lot about the 43 million uninsured Americans. It is 
curious, first of all, that we never hear much from the majority party 
about the 43 million uninsured Americans in April when we are doing the 
budget resolution. It only seems to come up when the patients' bill of 
rights comes up and they need a justification for their position.
  First of all, AHPs. The theory behind AHPs is that employers are 
going to enjoy a reduction in their premiums; and, therefore, more 
employers are going to buy health insurance and more individuals are 
going to be covered. That just does not square with the objective 
analyses that have been done of the AHP concept. One of them was done 
by the Congressional Budget Office, whose researchers concluded that 
AHPs would not reduce overall health insurance costs. The CBO found 
that four in five workers would see their health insurance costs 
increase under this amendment, under AHP legislation, because of 
disruption in health insurance markets. So the illusion that premiums 
would go down is not the fact.
  The second problem with AHPs is that it really is a race for the 
bottom. It preempts and therefore repeals the consumer protection 
legislation adopted by States all across the country, legislation that 
requires a minimum length of stay after a C-section for a woman who has 
given birth, legislation that requires a minimum length of stay after a 
radical mastectomy. All of these consumer protections are repealed when 
the AHPs go in.
  Maybe there is some argument that prices would go down, that if you 
eliminate quality standards and fiduciary standard, you could make it 
very cheap, but it would not be worth the money that people pay. So the 
argument that more people are going to be insured by AHPs just does not 
square with the facts. It does not square with the study by Rand 
researchers Steve Long and Susan Marque, who found that existing AHPs 
have not reduced insurance costs for participants.
  The next idea that is going to get more people insured is individual 
health savings accounts. This is remarkable. The theory behind this is 
that a person making $21,000 or $22,000 a year who works full-time and 
has no health insurance is going to put all of this extra income that 
she has into one of these medical savings accounts at the end of the 
week, and that all of this extra income that she generates is going to 
pile up and provide her with the health benefit that her employer is 
either unable or unwilling to afford.
  I would be curious as to how anyone in the majority could explain to 
us where this additional income is going to come from? I would invite 
the majority, I would yield to anyone over there, to tell me what 
present data tells us about who is participating in MSAs now, what the 
medium income of the participant is, how many people are participating 
in MSAs, whether they are in the bottom 30 percent of the wage earners 
in the country, since most of the uninsured working people in this 
country are in the bottom 30 percent of wage earners.
  So this is a remarkable idea. We are giving low-income, full-time 
working people the right to put away money that they do not have. We 
perhaps should also introduce an amendment giving them the right to 
purchase a Rolls Royce, or a condominium at an expensive resort. It is 
about as useful to them, because they do not have the money to put 
away.
  Mr. FLETCHER. Mr. Chairman, will the gentleman yield?
  Mr. ANDREWS. I yield to the gentleman from Kentucky.
  Mr. FLETCHER. Mr. Chairman, would the gentleman please explain to me 
why MSA expansion is in your bill, and why the patient protections in 
that bill will not protect those patients in MSAs?
  Mr. ANDREWS. Mr. Chairman, reclaiming my time, because it was 
necessary to build a majority coalition to pass the bill, which we 
would have done had the leadership brought it to the floor when it was 
originally promised.
  Mr. Chairman, the problem with this amendment is it suffers the 
illusion, the continuing illusion, that we are going to cover more 
people. You want to cover more people? Put more money in the S-chip 
program. Repeal just a little piece of the tax cut that passed a couple 
of months ago and put more money into the program that has enrolled 
millions of children, and could enroll their parents, if we extended 
that. That is the way to enroll more people in health insurance.
  You want to enroll more people in health insurance? Let seniors 55 
and over buy into Medicare at their own expense. You want to cover more 
people by health insurance? Expand Medicaid reimbursement to the 
States. That is the way to do it; not this fraud, not this illusion 
that is before us today.
  Mr. Chairman, I reserve the balance of my time.
  Mr. SAM JOHNSON of Texas. Mr. Chairman, I yield myself 2 minutes.
  Mr. Chairman, MSAs are important for more than half of the 43 million 
small business owners, their employees and their families, and in spite 
of what you say, the truth is that working-class people do use MSAs, 
and I am going to quote you.
  ``All three of us are working middle-class mothers, two of us are 
single moms, and we all have medical savings accounts that provide 
health insurance for our families. Our message to people in Washington 
is plain, unmistakable English that MSAs work.''
  Mr. ANDREWS. Mr. Chairman, will the gentleman yield?
  Mr. SAM JOHNSON of Texas. I yield to the gentleman from New Jersey.
  Mr. ANDREWS. Mr. Chairman, I wonder if the gentleman could tell us 
the source of the quote he just read?
  Mr. SAM JOHNSON of Texas. Mr. Chairman, reclaiming my time, I will 
get it to the gentleman. I will tell him what he tells me: I will send 
it to you in writing.
  Mr. Chairman, let me say that it is unfortunate that the base bill we 
are considering does just the opposite of providing insurance for our 
people. We believe that creating association health plans and expanding 
medical savings accounts guarantees the access they need. Working 
together, it helps employees and employers lower the cost of health 
insurance and gets the benefits they may not have had.
  Increasing access to Medical Savings Accounts would help those people 
struggling to make ends meet. Medical savings accounts empower people 
to save their own money, tax free, for medical expenses in conjunction 
with a high deductible health plan. Health expenses can break the 
family budget. MSAs help cushion the blow. They help people get the 
care they need from a doctor of their choice or a hospital of their 
choice. The base bill does not do that.
  It is time to focus on the uninsured, focus on access and 
affordability. This amendment is good for America and the 43 million 
Americans who do not have health insurance.
  Do what is right. Vote for this amendment.
  Mr. Chairman, I yield the rest of my time to the gentleman from 
Kentucky (Mr. Fletcher) and ask unanimous consent that he be allowed to 
control the time.
  The CHAIRMAN. Is there objection to the request of the gentleman from 
Texas?
  There was no objection.
  Mr. ANDREWS. Mr. Chairman, I am pleased to yield 2 minutes to the 
gentleman from Ohio (Mr. Brown).
  Mr. BROWN of Ohio. Mr. Chairman, I thank the gentleman for yielding.
  Mr. Chairman, it is ironic that the gentleman from California 
(Chairman Thomas) calls this amendment the access amendment. It is also 
disingenuous.
  This amendment would reduce access to health insurance, not increase 
it. The gentleman from California (Chairman Thomas) knows that. He 
knows

[[Page H5259]]

this amendment has nothing to do with access; it has everything to do 
with helping a few individuals in a few businesses at the expense of 
the rest of us. It has everything to do with campaign contributions, as 
the gentleman from California (Mr. Stark) pointed out earlier.
  Association health plans and MSAs make health insurance less 
expensive for a few healthy individuals and a few employers, while 
costs rise for every other individual and every other employer. 
Association health plans skim low-risk businesses from the rest of the 
insurance pool. Every other bill carries a larger burden when more risk 
is spread over fewer groups.
  Medical savings accounts, they can be a great deal when you are 100 
percent healthy. When you are sick, they turn into an expensive 
disappointment. The Congressional Research Service estimates that 
commercial insurance premiums will increase 2 percent or more if 
association plans are permitted.
  Iris Lav and Emmett Keeler, two highly respected health services 
researchers, say that premiums for conventional insurance could more 
than double if MSA use becomes widespread.
  Last night at midnight, the gentleman from California (Chairman 
Thomas) sold this House a bill of goods, $27 billion in tax giveaways 
to the Nation's oil companies. I ask my colleagues, do not buy it 
again. A real patients' bill of rights is not going to blow the top off 
insurance premiums, but association health plans and medical savings 
accounts, sweetheart deals for the fortunate few, certainly will.
  I urge Members to vote against the ill-conceived Thomas amendment.
  Mr. FLETCHER. Mr. Chairman, I yield 2 minutes to the gentleman from 
Ohio (Mr. Boehner), Chairman of the Committee on Education and the 
Workforce.
  Mr. BOEHNER. Mr. Chairman, let me once again congratulate my 
colleague, the gentleman from Kentucky (Mr. Fletcher), for his 
tremendous job in helping to move this entire process along this year. 
He has spent weeks and months, I might add, trying to build consensus 
for how do we break the gridlock and how do we move a real patients' 
bill of rights.
  Now, my colleague, who was just here opposing association health 
plans and medical savings accounts, it should not surprise any of us, 
because he is one of the larger promoters of a single payer national 
health care system. My goodness, if we get people insured by private 
insurance, which is what most people want, there will not be any need 
for a single payer system.

                              {time}  1800

  In 1992, when this issue of health care began to be a big issue in 
America, we were worried about those 36 million Americans who had no 
health insurance. We remember the 1992 presidential campaign. We 
remember 1993, when we had this big effort of having a national health 
insurance plan, a card for every American. Then Americans stood up and 
said no, no, please, we do not want that. Our own health insurance is 
very good.
  Then, over the last 6 years, all we have done is talk about patients' 
rights, and while they are important and we need to deal with them, let 
us admit that the far bigger problem in America today are the 43 
million Americans who have no health insurance at all. All these 
patient protections, all the consumer protections my colleague just 
talked about mean absolutely nothing to those Americans who have no 
health insurance.
  What we want to do under this amendment is make it easier for small 
businesses to offer health insurance for their employees, because 80 
percent of those 43 million Americans have jobs, they have full-time 
jobs, and they work for smaller employers who do not have the ability 
to create large pools. But by allowing them to work in an association, 
whether it be the NFIB, whether it be the Association of American 
Florists, and create larger pools, they will get lower rates, they will 
have a better opportunity at getting health insurance. And why should 
we not help them?
  Mr. FLETCHER. Mr. Chairman, I yield 1 minute to the gentleman from 
California (Mr. Dooley), who has cosponsored the Small Business 
Fairness Act, which is the bill on association health plans.
  Mr. DOOLEY of California. Mr. Chairman, I rise in support of the 
association health plan proposal before us.
  The number one problem in health care facing Americans is not their 
problems with their managed care organization; the number one problem 
facing Americans today is the fact that we have 43 million of our 
citizens who are uninsured.
  I represent a district in the Central Valley of California, one of 
the lowest income areas, one that has a lot of families that are farm 
workers. It is predominantly Latino in its makeup. Association health 
plans hold the promise of allowing associations to come together to 
offer these families and the children of these farm worker families a 
health insurance policy that otherwise would not be available to them.
  Mr. Chairman, we have to come to understand that what we are trying 
to do here is to provide a mechanism for farmers and small business 
people to come together, to come together so that they can offer a plan 
that is similar to what Boeing, Microsoft and GM are offering to their 
employees. This holds the promise of ensuring that some of those 43 
million people, some of whom are living in my district, some of whom 
have the lowest incomes, will have access to a quality health insurance 
plan that otherwise they would be denied.
  Mr. FLETCHER. Mr. Chairman, I yield 2 minutes to the gentleman from 
Texas (Mr. Armey), our majority leader.
  Mr. ARMEY. Mr. Chairman, I thank the gentleman for yielding me this 
time.
  Mr. Chairman, I would like to thank the gentleman from Kentucky (Mr. 
Fletcher) for offering this amendment. I would also like to thank the 
gentleman from Illinois (Mr. Hastert), the Speaker of the House; the 
gentleman from California (Mr. Thomas); the gentleman from Illinois 
(Mr. Lipinski); the gentlewoman from Connecticut (Mrs. Johnson); and 
the gentleman from Georgia (Mr. Norwood) for their leadership and their 
continuing strong commitments to the Archer Medical Savings Accounts.
  Mr. Chairman, patients need more than a bill of rights, they need a 
declaration of independence. Millions of American families today find 
themselves trapped in HMOs that they did not choose and they do not 
like. This amendment offers them a get-out-of-jail-free card. It offers 
them hope, gives them options that help them find peace of mind and 
more control over their health care treatments. It begins to address 
the basic unfairness in the Tax Code that created the HMO trap in the 
first place.
  There are too many people in this debate, Mr. Chairman, I believe, 
who have nothing to say except patients should have a right to sue 
their HMO. But I submit that, before that, they should have a right to 
fire their HMO.
  Mr. Chairman, this is America. We should have the freedom to take our 
business wherever we choose. Unfortunately, today's Tax Code denies 
that freedom to millions of American families, especially the poor and 
minorities and especially Hispanics.
  If we really care about the uninsured, if we really care about the 
waitresses, the house painters, the field workers and the others shut 
out of affordable health care today, then we must make the taxation of 
health benefits fair for everyone, regardless of where they work or how 
much they make. By making Archer Medical Savings Accounts available to 
everyone, this amendment starts us down the road towards basic tax 
fairness.
  Medical savings accounts can be a godsend for the uninsured. 
According to the IRS, one-third of the MSAs sold under the current 
pilot project have been purchased by folks who have otherwise been 
uninsured for at least the previous 6 months. Imagine how many 
uninsured people we could help if MSAs were given a fair shot in the 
marketplace, as this amendment would do.
  Mr. Chairman, this is an amendment with a heart. It would be 
heartless to defeat it.
  Mr. ANDREWS. Mr. Chairman, I yield myself such time as I may consume.
  Under the budget rules of the House of Representatives, when someone 
brings a bill to the floor that would reduce revenue flow of the 
Treasury,

[[Page H5260]]

they normally have to show where it is going to be paid for. This 
amendment was given an exception to that, so it is not subject to a 
point of order.
  I wonder if anyone on the majority side could tell us where the $5 
billion over the next 10 years is going to come from to pay for this 
bill.
  Mr. Chairman, I yield to anyone on the majority side to tell us where 
the $5 billion is going to come from.
  Mr. THOMAS. Mr. Chairman, I thank the gentleman for yielding.
  I would tell the gentleman we have a golden opportunity today to find 
more than $2 billion of the amount that the gentleman indicated, 
because as the gentleman well notes, the medical malpractice amendment 
that will be up after we pass the Norwood amendment is scored by the 
appropriate scoring agencies as saving almost $2 billion.
  Mr. ANDREWS. Mr. Chairman, reclaiming my time, I wonder where the 
other $3 billion might come from, the other $3 billion.
  Mr. THOMAS. Mr. Chairman, will the gentleman yield?
  Mr. ANDREWS. I yield to the gentleman from California.
  Mr. THOMAS. Mr. Chairman, we have a number of other measures that we 
will move along. As chairman of the Committee on Ways and Means, I can 
assure the gentleman that $3 billion over 10 years is not that large an 
amount of money to find, and as chairman of the Committee on Ways and 
Means, I pledge to the gentleman, we will find it.
  If that is the gentleman's concern about not supporting the 
amendment, I hope he now supports it.
  Mr. ANDREWS. Mr. Chairman, will the gentleman from California (Mr. 
Thomas) do it by raising other revenues by $3 billion, by raising 
taxes?
  Mr. THOMAS. Mr. Chairman, if the gentleman would again yield, I would 
tell the gentleman there is no need for $3 billion to raise taxes. 
There are a number of administrative changes, cleaning up provisions 
that are already in the law that the gentleman was instrumental in 
putting on the books, where we can find savings of far more than that.
  Mr. ANDREWS. Mr. Chairman, reclaiming my time, I look forward to 
that.
  Mr. Chairman, I reserve the balance of my time.
  Mr. FLETCHER. Mr. Chairman, I yield 30 seconds to the gentleman from 
Georgia (Mr. Isakson).
  Mr. ISAKSON. Mr. Chairman, I rise on behalf of those 43 million 
people who are America's salesmen, America's independent contractors, 
America's retail clerks, America's small businessmen and women, and I 
would ask each of those who oppose this to ask yourself this question 
before they vote: Why should we deny 43 million Americans the patients' 
rights, that those we are fighting for already enjoy, by not giving 
them better access to health care coverage which would otherwise not be 
available?
  Mr. FLETCHER. Mr. Chairman, I yield 1 minute to the gentleman from 
Illinois (Mr. Phelps).
  Mr. PHELPS. Mr. Chairman, I thank the gentleman for yielding me this 
time.
  Mr. Chairman, I rise today in support of this important amendment, 
which I have cosponsored. While we are discussing the Patients' Bill of 
Rights, it is important to remember that one of the major problems 
facing our great Nation today is the problem of the uninsured.
  As a member of the Committee on Small Business, I know the positive 
effect that association health plans and medical savings plans can have 
on employees and employers of small businesses across the Nation. Of 
the 43 million uninsured in America, 60 percent of those either own or 
work in small business.
  Small business employers need the opportunity to offer their 
employees a strong benefits package at a reasonably low cost. AHPs 
allow small businesses to join together across State lines to obtain 
the accessibility, affordability and choice in the health care 
marketplace now available to employees in large companies and organized 
labor unions.
  Medical savings accounts are extremely beneficial because they 
actually allow individuals to be in control of their own health care, 
allowing them to decide how they want their money to be spent. More 
than one-third of the people who currently participate in MSAs were 
previously uninsured. It only makes sense to provide greater access to 
the uninsured, and AHPs and MSAs help do this.
  Mr. FLETCHER. Mr. Chairman, I yield 30 seconds to the gentleman from 
Illinois (Mr. Manzullo), chairman of the Committee on Small Business.
  (Mr. MANZULLO asked and was given permission to revise and extend 
remarks.)
  Mr. MANZULLO. Mr. Chairman, as chairman of the Committee on Small 
Business, I receive thousands of letters from small employers, many 
from northern Illinois, who are struggling with surging health care 
costs for their employees. We call this ``Health Care Horror Stories 
from America's Small Employers.''
  Today, we have an opportunity to protect patients' rights and improve 
the quality of health care. This amendment allows small employers the 
ability to bring down health insurance costs for themselves and their 
employees by joining association health plans, similar to the way that 
labor unions pool their members to lower premiums for their insurance. 
We cannot possibly believe we are protecting patients if more small 
entrepreneurs stop paying for coverage.
  Mr. Chairman, I encourage the adoption of this amendment.
  As Chairman of the Committee on Small Business, I am troubled by the 
fact that of the 43 million Americans with no health insurance, more 
than 60 percent are the families of small entrepreneurs and their 
employees.
  I have received thousands of letters from small employers--many from 
the northern Illinois district I represent--who are struggling with 
surging health care costs for their employees.
  Geoff Brook is one of my constituents who offers health care coverage 
to his employees at Energy Dynamics, Inc. in Machesney Park, Illinois. 
The last three years especially, premiums have skyrocketed and Geoff 
has reluctantly been forced to cancel coverage for the families of his 
employees and raise deductibles for his employees themselves. He 
recently received a notice from his insurance company that his 
employees' premiums were going to increase another 34 percent for the 
coming year. ``As the owner of a 20-year-old small business with 18 
employees, I can tell you that employee health insurance is already at 
the point where any further rate increases will cause us to discontinue 
coverage for our employees,'' Geoff said.
  Mark O'Donnell is another of my constituents who employs 35 people at 
Kenwood Electrical Systems, Inc. in Rockford, Illinois. Mark writes, 
``Our health insurance costs were raised 43 percent last year and 34 
percent this year and there is nothing we can do about it. We have a 
real problem here.''
  And Linda Taylor, who owns Taylor Auto Parts with her husband, Larry, 
in Woodstock, Illinois, writes, ``Health care costs and insurance are 
draining us. Last year, we had a 14 percent increase and had to change 
to $1,000 deductibles. Now, the costs are going up 21 percent again. I 
truthfully do not know how to handle this latest increase,'' said 
Linda, who provides health care coverage to four employees.
  This is not a unique problem in my district. Access to healthcare is 
a problem our small entrepreneurs face each year they have decide 
between paying escalating premiums and dropping coverage of their 
employees. Large health plans may spread the increased costs over their 
large applicant pools without much of a change in enrollment. A large 
business or union health plan enrollee might spend slightly more on 
healthcare, but it will probably not push them out of the health care 
system.
  The small entrepreneur and his or her employees, however, struggle 
with radical increases in health care premiums. Especially for a 
business with fewer than 50 employees, its health care premiums 
skyrocket when a member of the small enrollee pool becomes ill or 
injured. When the husband of a Chrysler employee goes to an emergency 
room, the Chrysler health insurance plan easily spreads out the cost, 
but for a small auto mechanic, the cost of his employee's trip to the 
emergency room forces a small group of workers to shoulder a 
significant burden.
  Fortunately, today, we have an opportunity to protect patients' 
rights and improve the quality of health care without causing more 
Americans to lose their health insurance. This imperative amendment 
will give small employers hope to bring down health insurance costs for 
themselves and their employees by joining Association Health Plans and 
through expanded use of Medical Savings Accounts.
  Association Health Plans (AHPs) will provide greater choice and 
access to affordable, high quality, private sector health insurance for 
millions of working families employed in small businesses.

[[Page H5261]]

  AHPs empower small business owners, who currently cannot afford to 
offer health insurance to their employees, to access health insurance 
through trade and professional associations and Chambers of Commerce. 
In other words, AHPs allow national trade and professional 
associations, like the National Federation of Independent Business, the 
National Restaurant Association or the U.S. Chamber of Commerce, to 
sponsor health care plans. The small business owners who are members of 
the associations can buy into these plans for themselves and their 
employees.
  These associations would cover very large groups, would enjoy large 
economies of scale to that of a large business or union, and could 
offer self-funded plans that would not have to provide any margin for 
insurance company profits.
  AHPs give small businesses and the self-employed the freedom to 
design more affordable benefit options and offer their workers access 
to health care coverage. These new coverage options promote greater 
competition, lower costs and new choices in health insurance markets. 
By allowing individuals and small employers to join together, AHPs 
promote the same economies of scale and purchasing clout that workers 
in large companies currently realize.
  Expansion of Medical Savings Accounts (MSAs) will make insurance more 
affordable for businesses with qualifying high deductible plans. 
Expansion of MSAs will encourage more individuals to place tax-
deductible funds into savings accounts for use in routine medical care 
while still allowing a wide choice among doctors.
  Initially created by Health Insurance Portability and Accountability 
Act of 1996, MSAs have not been fully utilized by their target sector. 
However, enacting simple reforms and expansions will allow more small 
businesses to cut down on their healthcare costs. These provisions 
include repealing limits on the number of MSAs, making active accounts 
generally available to anyone with qualifying high deductible 
insurance, allowing contributions up to the amount of the insurance 
deductible, allowing contributions to be made both by employers and 
account owners, lowering minimum insurance deductibles for single and 
family coverage, allowing use under cafeteria plans, and allowing plans 
not to have a deductible for preventive care, even if this is not 
required by state law.
  AHP and MSA legislation will not directly offset the increased costs 
of healthcare when a Patients' Bill of Rights is enacted. However, 
small businesses are the sector most likely to cease offering insurance 
because of increase costs, and AHP and MSA legislation will allow these 
groups to access and afford quality healthcare.
  We cannot possibly believe we are protecting patients if more small 
entrepreneurs stop paying for coverage--which will happen with rising 
premiums. Association Health Plan and Medical Savings Account 
provisions are the only responsible way to protect patients.
  Mr. ANDREWS. Mr. Chairman, I yield myself such time as I may consume.
  Mr. Chairman, the record shows that this amendment will not 
substantially increase coverage. The association health plans will not 
substantially reduce premiums; therefore, more employers will not be 
enticed to buy in. MSAs are not going to work for low- and modest-
income people who do not have money to put into the MSAs.
  This is an illusion, much like the Norwood amendment that we are 
going to debate next. I urge the defeat of the amendment.
  Mr. Chairman, I yield back the balance of my time.
  Mr. FLETCHER. Mr. Chairman, I yield 1 minute to the gentleman from 
California (Mr. Cunningham).
  Mr. CUNNINGHAM. Mr. Chairman, the gentleman on the other side cannot 
hide the truth. Associated health care plans, if you have a union or 
large business that has maybe 3,000 or 4,000 employees, they can go to 
a health care organization and negotiate lower rates because it spreads 
out the risk.
  We are asking that maybe all the bakers get together, all the barbers 
get together, little groups that can form into larger groups so that 
they can negotiate those health care plans with lower rates. If we have 
lower rates, we are going to have more people access into them, so the 
gentleman is just flat wrong.
  Another gentleman talked about taxes. The gentleman from Missouri 
(Mr. Gephardt) just last week said he wants to raise taxes. In 1993, he 
was proud of it. They raised taxes on the middle class. We want to give 
it back to the American people for medical savings accounts, not have 
campaign finance fund-raisers with Jane Fonda.
  Mr. FLETCHER. Mr. Chairman, I yield 30 seconds to the gentleman from 
Indiana (Mr. Pence).
  (Mr. PENCE asked and was given permission to revise and extend his 
remarks.)
  Mr. PENCE. Mr. Chairman, I rise in strong support of the amendment 
and of Indiana's small business owners. For too long they have lacked 
access to affordable health care options to offer their employees.
  The answer, Mr. Chairman, is fairness. Large corporations and labor 
unions can offer health insurance across State lines under a single 
uniform code and reap all of the benefits of the economies of scale. 
Congress today in this amendment must level the playing field for small 
business.
  Let us grant small businesses the same rights as Fortune 500 
companies. Association health plans are the answer, and I urge my 
colleagues to support this amendment.
  Mr. FLETCHER. Mr. Chairman, I yield myself such time as I may 
consume.
  Mr. Chairman, as we look at the problem facing America and health 
care, the most daunting problem we have are the 43 million that are 
uninsured. The majority of those uninsured are working individuals. The 
majority of those working individuals are in small businesses. What we 
do with association health plans is allow those small businesses to 
come together, to insure themselves across the Nation.
  Mr. Chairman, this last year when I was going across my district, I 
talked to farmers that were paying on the individual market for their 
family up to $800 and 900 a month. That was unaffordable for them. Now, 
imagine if the American Farm Bureau could provide a plan and pool 
across the Nation and offer that individual farmer a policy for his 
family that was 30 percent, maybe more than that, reduced from what he 
is paying now; what impact would that have on the farmers across this 
country?

                              {time}  1815

  Or the other 81 or number of organizations, associations that we have 
supporting this bill, because their associations should be able to 
offer their members a plan just like unions do, multi-employer plans 
now.
  So I think in addition to that, when we combine this to the Ganske-
Dingell bill and hopefully the Norwood amendment, we provide all the 
patient protections that ensure that patients get not only this pooled 
health care plan that will reduce costs, but we provide them the 
patient protections that everyone will get across this Nation including 
the accountability.
  I want to encourage my colleagues to vote for this measure to improve 
the health care in America and provide more insurance for Americans.
  Mrs. MORELLA. Mr. Chairman, while I want to increase health insurance 
access for all Americans, Association Health Plans (AHPs) are not the 
way to do it.
  The provisions put forth in this amendment would exempt AHPs from 
State laws requiring the coverage of services for women, children, and 
other vulnerable groups. In my State of Maryland, AHPs would be exempt 
from requirements for insurance plans to cover maternity care, 
pediatric services for children, mammography and cervical cancer 
screening, contraceptives, nurse midwives, mastectomy stays and breast 
reconstruction.
  Exempting AHPs from State insurance reform laws is also bad public 
policy. The National Governors Associations, National Conference of 
State Legislatures, and the National Association of Insurance 
Commissioners have written in staunch opposition to these ``access'' 
provisions.
  Moreover, this proposal will harm many workers, while doing little to 
address the amount of uninsured individuals. The Congressional Budget 
Office (CBO) projected that 20 million people would experience a 
premium rate increase under this proposal, while only 5 million would 
see their rates decline. The CBO also found that any premium reductions 
by AHPs would stem from attracting healthier members from State 
insurance pools, which by the way, Medical Savings Accounts also end up 
doing, and eliminate State required health care benefits.
  In 1974, Congress passed a law creating an exemption for AHPs. It was 
an unmitigated disaster. A report by the former chief counsel of the 
Senate Permanent Subcommittee on Investigations has noted that the 
current AHP exemption repeats the historical mistakes of the original 
1974 exemption. Congress had to pass a law several years later 
returning regulatory authority to the States. Let's not make the same 
mistake twice.

[[Page H5262]]

  The CHAIRMAN. All time for debate on this amendment has expired.
  The question is on the amendment offered by the gentleman from 
California (Mr. Thomas).
  The question was taken; and the Chairman announced that the ayes 
appeared to have it.


                             Recorded Vote

  Mr. ANDREWS. Mr. Speaker, I demand a recorded vote.
  A recorded vote was ordered.
  The vote was taken by electronic device, and there were--ayes 236, 
noes 194, not voting 4, as follows:

                             [Roll No. 328]

                               YEAS--236

     Aderholt
     Akin
     Armey
     Bachus
     Baker
     Ballenger
     Barcia
     Barr
     Bartlett
     Barton
     Bass
     Bereuter
     Biggert
     Bilirakis
     Blunt
     Boehlert
     Boehner
     Bonilla
     Bono
     Brady (TX)
     Brown (SC)
     Bryant
     Burr
     Burton
     Buyer
     Callahan
     Calvert
     Camp
     Cannon
     Cantor
     Capito
     Castle
     Chabot
     Chambliss
     Coble
     Collins
     Combest
     Condit
     Cooksey
     Cox
     Cramer
     Crane
     Crenshaw
     Cubin
     Culberson
     Cunningham
     Davis, Jo Ann
     Davis, Tom
     Deal
     DeLay
     DeMint
     Diaz-Balart
     Dooley
     Doolittle
     Dreier
     Duncan
     Dunn
     Ehlers
     Emerson
     English
     Everett
     Ferguson
     Flake
     Fletcher
     Foley
     Forbes
     Fossella
     Frelinghuysen
     Gallegly
     Gekas
     Gibbons
     Gilchrest
     Gillmor
     Gilman
     Goode
     Goodlatte
     Goss
     Graham
     Granger
     Graves
     Green (WI)
     Greenwood
     Grucci
     Gutknecht
     Hall (TX)
     Hansen
     Harman
     Hart
     Hastert
     Hastings (WA)
     Hayes
     Hayworth
     Hefley
     Herger
     Hilleary
     Hobson
     Hoekstra
     Horn
     Hostettler
     Houghton
     Hulshof
     Hunter
     Hutchinson
     Hyde
     Isakson
     Istook
     Jenkins
     Johnson (CT)
     Johnson (IL)
     Johnson, Sam
     Jones (NC)
     Keller
     Kelly
     Kennedy (MN)
     Kerns
     King (NY)
     Kingston
     Kirk
     Knollenberg
     Kolbe
     LaHood
     Largent
     Larsen (WA)
     Larson (CT)
     Latham
     LaTourette
     Leach
     Lewis (CA)
     Lewis (KY)
     Linder
     LoBiondo
     Lucas (KY)
     Lucas (OK)
     Maloney (CT)
     Manzullo
     Mascara
     McCrery
     McHugh
     McInnis
     McKeon
     Mica
     Miller (FL)
     Miller, Gary
     Moran (KS)
     Moran (VA)
     Murtha
     Myrick
     Nethercutt
     Ney
     Northup
     Norwood
     Nussle
     Osborne
     Ose
     Otter
     Oxley
     Paul
     Pence
     Peterson (MN)
     Peterson (PA)
     Petri
     Phelps
     Pickering
     Pitts
     Platts
     Pombo
     Portman
     Pryce (OH)
     Putnam
     Quinn
     Radanovich
     Ramstad
     Regula
     Rehberg
     Reynolds
     Riley
     Rogers (KY)
     Rogers (MI)
     Rohrabacher
     Ros-Lehtinen
     Roukema
     Royce
     Ryan (WI)
     Ryun (KS)
     Saxton
     Scarborough
     Schaffer
     Schrock
     Sensenbrenner
     Sessions
     Shadegg
     Shaw
     Shays
     Sherwood
     Shimkus
     Shuster
     Simmons
     Simpson
     Skeen
     Smith (MI)
     Smith (NJ)
     Smith (TX)
     Smith (WA)
     Souder
     Stearns
     Stump
     Sununu
     Sweeney
     Tancredo
     Tauzin
     Taylor (NC)
     Terry
     Thomas
     Thompson (CA)
     Thornberry
     Thune
     Tiahrt
     Tiberi
     Toomey
     Traficant
     Upton
     Vitter
     Walden
     Walsh
     Wamp
     Watkins (OK)
     Watts (OK)
     Weldon (FL)
     Weldon (PA)
     Weller
     Whitfield
     Wicker
     Wilson
     Wolf
     Young (AK)
     Young (FL)

                               NAYS--194

     Abercrombie
     Ackerman
     Allen
     Andrews
     Baca
     Baird
     Baldacci
     Baldwin
     Barrett
     Becerra
     Bentsen
     Berkley
     Berman
     Berry
     Bishop
     Blagojevich
     Blumenauer
     Bonior
     Borski
     Boswell
     Boucher
     Boyd
     Brady (PA)
     Brown (FL)
     Brown (OH)
     Capps
     Capuano
     Cardin
     Carson (IN)
     Carson (OK)
     Clay
     Clayton
     Clement
     Clyburn
     Conyers
     Costello
     Coyne
     Crowley
     Cummings
     Davis (CA)
     Davis (FL)
     Davis (IL)
     DeFazio
     DeGette
     Delahunt
     DeLauro
     Deutsch
     Dicks
     Dingell
     Doggett
     Doyle
     Edwards
     Ehrlich
     Engel
     Eshoo
     Etheridge
     Evans
     Farr
     Fattah
     Filner
     Ford
     Frank
     Frost
     Gephardt
     Gonzalez
     Gordon
     Green (TX)
     Gutierrez
     Hall (OH)
     Hastings (FL)
     Hill
     Hilliard
     Hinchey
     Hinojosa
     Hoeffel
     Holden
     Holt
     Honda
     Hooley
     Hoyer
     Inslee
     Israel
     Jackson (IL)
     Jackson-Lee (TX)
     Jefferson
     John
     Johnson, E. B.
     Jones (OH)
     Kanjorski
     Kaptur
     Kennedy (RI)
     Kildee
     Kilpatrick
     Kind (WI)
     Kleczka
     Kucinich
     LaFalce
     Lampson
     Langevin
     Lantos
     Lee
     Levin
     Lewis (GA)
     Lofgren
     Lowey
     Luther
     Maloney (NY)
     Markey
     Matheson
     Matsui
     McCarthy (MO)
     McCarthy (NY)
     McCollum
     McDermott
     McGovern
     McIntyre
     McKinney
     McNulty
     Meehan
     Meek (FL)
     Meeks (NY)
     Menendez
     Millender-McDonald
     Miller, George
     Mink
     Mollohan
     Moore
     Morella
     Nadler
     Napolitano
     Neal
     Oberstar
     Obey
     Olver
     Ortiz
     Owens
     Pallone
     Pascrell
     Pastor
     Payne
     Pelosi
     Pomeroy
     Price (NC)
     Rahall
     Rangel
     Reyes
     Rivers
     Rodriguez
     Roemer
     Ross
     Rothman
     Roybal-Allard
     Rush
     Sabo
     Sanchez
     Sanders
     Sandlin
     Sawyer
     Schakowsky
     Schiff
     Scott
     Serrano
     Sherman
     Shows
     Skelton
     Slaughter
     Snyder
     Solis
     Spratt
     Stark
     Stenholm
     Strickland
     Stupak
     Tanner
     Tauscher
     Taylor (MS)
     Thompson (MS)
     Thurman
     Tierney
     Towns
     Turner
     Udall (CO)
     Udall (NM)
     Velazquez
     Visclosky
     Waters
     Watson (CA)
     Watt (NC)
     Waxman
     Weiner
     Wexler
     Woolsey
     Wu
     Wynn

                             NOT VOTING--4

     Ganske
     Issa
     Lipinski
     Spence

                              {time}  1840

  Messrs. BERMAN, INSLEE, BAIRD, and SHOWS changed their vote from 
``aye'' to ``no.''
  Mrs. ROUKEMA and Ms. HARMAN changed their vote from ``no'' to 
``aye.''
  So the amendment was agreed to.
  The result of the vote was announced as above recorded.
  Mr. ISSA. Mr. Chairman, on rollcall No. 328, I was inadvertently 
detained. Had I been present, I would have voted ``aye''.
  The CHAIRMAN. It is now in order to consider amendment No. 2 printed 
in House Report 107-184.


                 Amendment No. 2 Offered by Mr. Norwood

  Mr. NORWOOD. Mr. Chairman, I offer an amendment.
  The CHAIRMAN. The Clerk will designate the amendment.
  The text of the amendment is as follows:

       Amendment No. 2 offered by Mr. Norwood:
       Amend section 402 to read as follows:

     SEC. 402. AVAILABILITY OF CIVIL REMEDIES.

       (a) 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:
       ``(n) Cause of Action Relating to Claims for Health 
     Benefits.--
       ``(1) Cause of action.--
       ``(A) In general.--With respect to an action commenced by a 
     participant or beneficiary (or the estate of the participant 
     or beneficiary) in connection with a claim for benefits under 
     a group health plan, if--
       ``(i) a designated decisionmaker described in paragraph (2) 
     fails to exercise ordinary care--

       ``(I) in making a determination denying the claim for 
     benefits under section 503A (relating to an initial claim for 
     benefits),
       ``(II) in making a determination denying the claim for 
     benefits under section 503B (relating to an internal appeal), 
     or
       ``(III) in failing to authorize coverage in compliance with 
     the written determination of an independent medical reviewer 
     under section 503C(d)(3)(F) that reverses a determination 
     denying the claim for benefits, and

       ``(ii) the delay in receiving, or failure to receive, 
     benefits attributable to the failure described in clause (i) 
     is the proximate cause of personal injury to, or death of, 
     the participant or beneficiary,

     such designated decisionmaker shall be liable to the 
     participant or beneficiary (or the estate) for economic and 
     noneconomic damages in connection with such failure and such 
     injury or death (subject to paragraph (4)).
       ``(B) Rebuttable presumption.--In the case of a cause of 
     action under subparagraph (A)(i)(I) or (A)(i)(II), if an 
     independent medical reviewer under section 503C(d) or 
     503C(e)(4)(B) upholds the determination denying the claim for 
     benefits involved, there shall be a presumption (rebuttable 
     by clear and convincing evidence) that the designated 
     decisionmaker exercised ordinary care in making such 
     determination.
       ``(2) Designated decisionmaker.--
       ``(A) Appointment.--
       ``(i) In general.--The plan sponsor or named fiduciary of a 
     group health plan shall, in accordance with this paragraph 
     with respect to a participant or beneficiary, designate a 
     person that meets the requirements of subparagraph (B) to 
     serve as a designated decisionmaker with respect to the cause 
     of action described in paragraph (1), except that--

       ``(I) with respect to health insurance coverage offered in 
     connection with a group health plan, the health insurance 
     issuer shall be the designated decisionmaker unless the plan 
     sponsor and the issuer specifically agree in writing (on a 
     form to be prescribed by the Secretary) to substitute another 
     person as the designated decisionmaker; or
       ``(II) with respect to the designation of a person other 
     than a plan sponsor or health insurance issuer, such person 
     shall satisfy the requirements of subparagraph (D).

       ``(ii) Plan documents.--The designated decisionmaker shall 
     be specifically designated as such in the written instruments 
     of the plan (under section 402(a)) and be identified as 
     required under section 121(b)(15) of the Bipartisan Patient 
     Protection Act.
       ``(B) Requirements.--For purposes of this paragraph, a 
     designated decisionmaker meets the requirements of this 
     subparagraph

[[Page H5263]]

     with respect to any participant or beneficiary if--
       ``(i) such designation is in such form as may be specified 
     in regulations prescribed by the Secretary,
       ``(ii) the designated decisionmaker--

       ``(I) meets the requirements of subparagraph (C),
       ``(II) assumes unconditionally all liability arising under 
     this subsection in connection with actions and failures to 
     act described in subparagraph (A) (whether undertaken by the 
     designated decisionmaker or the employer, plan, plan sponsor, 
     or employee or agent thereof) during the period in which the 
     designation under this paragraph is in effect relating to 
     such participant or beneficiary, and
       ``(III) where subparagraph (C)(ii) applies, assumes 
     unconditionally the exclusive authority under the group 
     health plan to make determinations on claims for benefits 
     (irrespective of whether they constitute medically reviewable 
     determinations) under the plan with respect to such 
     participant or beneficiary, and

       ``(iii) the designated decisionmaker and the participants 
     and beneficiaries for whom the decisionmaker has assumed 
     liability are identified in the written instrument required 
     under section 402(a) and as required under section 121(b)(15) 
     of the Bipartisan Patient Protection Act.

     Any liability assumed by a designated decisionmaker pursuant 
     to this paragraph shall be in addition to any liability that 
     it may otherwise have under applicable law.
       ``(C) Qualifications for designated decisionmakers.--
       ``(i) In general.--Subject to clause (ii), an entity is 
     qualified under this subparagraph to serve as a designated 
     decisionmaker with respect to a group health plan if the 
     entity has the ability to assume the liability described in 
     subparagraph (A) with respect to participants and 
     beneficiaries under such plan, including requirements 
     relating to the financial obligation for timely satisfying 
     the assumed liability, and maintains with the plan sponsor 
     certification of such ability. Such certification shall be 
     provided to the plan sponsor or named fiduciary upon 
     designation under this paragraph and not less frequently than 
     annually thereafter, or if such designation constitutes a 
     multiyear arrangement, in conjunction with the renewal of the 
     arrangement.
       ``(ii) Special qualification in the case of certain 
     reviewable decisions.--In the case of a group health plan 
     that provides benefits consisting of medical care to a 
     participant or beneficiary only through health insurance 
     coverage offered by a health insurance issuer, such issuer is 
     the only entity that may be qualified under this subparagraph 
     to serve as a designated decisionmaker with respect to such 
     participant or beneficiary, and shall serve as the designated 
     decisionmaker unless the employer or other plan sponsor acts 
     affirmatively to prevent such service.
       ``(D) Requirements relating to financial obligations.--For 
     purposes of subparagraphs (A)(i)(II) and (C)(i), the 
     requirements relating to the financial obligation of an 
     entity for liability shall include--
       ``(i) coverage of such entity under an insurance policy or 
     other arrangement, secured and maintained by such entity, to 
     effectively insure such entity against losses arising from 
     professional liability claims, including those arising from 
     its service as a designated decisionmaker under this 
     subsection; or
       ``(ii) evidence of minimum capital and surplus levels that 
     are maintained by such entity to cover any losses as a result 
     of liability arising from its service as a designated 
     decisionmaker under this subsection.

     The appropriate amounts of liability insurance and minimum 
     capital and surplus levels for purposes of clauses (i) and 
     (ii) shall be determined by an actuary using sound actuarial 
     principles and accounting practices pursuant to established 
     guidelines of the American Academy of Actuaries and in 
     accordance with such regulations as the Secretary may 
     prescribe and shall be maintained throughout the term for 
     which the designation is in effect. The provisions of this 
     subparagraph shall not apply in the case of a designated 
     decisionmaker that is a group health plan, plan sponsor, or 
     health insurance issuer and that is regulated under Federal 
     law or a State financial solvency law.
       ``(E) Limitation on appointment of treating physicians.--A 
     treating physician who directly delivered the care or 
     treatment or provided services which is the subject of a 
     cause of action by a participant or beneficiary under 
     paragraph (1) may not be appointed (or deemed to be 
     appointed) as a designated decisionmaker under this paragraph 
     with respect to such participant or beneficiary.
       ``(F) Failure to appoint.--With respect to any cause of 
     action under paragraph (1) relating to a denial of a claim 
     for benefits where a designated decisionmaker has not been 
     appointed in accordance with this paragraph, the plan sponsor 
     or named fiduciary responsible for determinations under 
     section 503 shall be deemed to be the designated 
     decisionmaker.
       ``(G) Effect of appointment.--The appointment of a 
     designated decisionmaker in accordance with this paragraph 
     shall not affect the liability of the appointing plan sponsor 
     or named fiduciary for the failure of the plan sponsor or 
     named fiduciary to comply with any other requirement of this 
     title.
       ``(H) Treatment of certain trust funds.--For purposes of 
     this subsection, the terms `employer' and `plan sponsor', in 
     connection with the assumption by a designated decisionmaker 
     of the liability of employer or other plan sponsor pursuant 
     to this paragraph, shall be construed to include a trust fund 
     maintained pursuant to section 302 of the Labor Management 
     Relations Act, 1947 (29 U.S.C. 186) or the Railway Labor Act 
     (45 U.S.C. 151 et seq.).
       ``(3) Requirement of exhaustion of independent medical 
     review.--
       ``(A) In general.--Paragraph (1) shall apply only if--
       ``(i) a final determination denying a claim for benefits 
     under section 503B has been referred for independent medical 
     review under section 503C(d) and a written determination by 
     an independent medical reviewer has been issued with respect 
     to such review, or
       ``(ii) the qualified external review entity has determined 
     under section 503C(c)(3) that a referral to an independent 
     medical reviewer is not required.
       ``(B) Injunctive relief for irreparable harm.--A 
     participant or beneficiary may seek relief under subsection 
     (a)(1)(B) prior to the exhaustion of administrative remedies 
     under section 503B or 503C (as required under subparagraph 
     (A)) if it is demonstrated to the court, by a preponderance 
     of the evidence, that the exhaustion of such remedies would 
     cause irreparable harm to the health of the participant or 
     beneficiary. Any determinations that already have been made 
     under section 503A, 503B, or 503C in such case, or that are 
     made in such case while an action under this subparagraph is 
     pending, shall be given due consideration by the court in any 
     action under subsection (a)(1)(B) in such case. 
     Notwithstanding the awarding of such relief under subsection 
     (a)(1)(B) pursuant to this subparagraph, no relief shall be 
     available under paragraph (1), with respect to a participant 
     or beneficiary, unless the requirements of subparagraph (A) 
     are met.
       ``(C) 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.
       ``(4) Limitations on recovery of damages.--
       ``(A) Maximum award of noneconomic damages.--The aggregate 
     amount of liability for noneconomic loss in an action under 
     paragraph (1) may not exceed $1,500,000.
       ``(B) Limitation on award of punitive damages.--In the case 
     of any action commenced pursuant to paragraph (1), the court 
     may not award any punitive, exemplary, or similar damages 
     against a defendant, except that the court may award 
     punitive, exemplary, or similar damages (in addition to 
     damages described in subparagraph (A)), in an aggregate 
     amount not to exceed $1,500,000, if--
       ``(i) the denial of a claim for benefits involved in the 
     case was reversed by a written determination by an 
     independent medical reviewer under section 503C(d)(3)(F); and
       ``(ii) there has been a failure to authorize coverage in 
     compliance with such written determination.
       ``(C) Permitting application of lower state damage 
     limits.--A State may limit damages for noneconomic loss or 
     punitive, exemplary, or similar damages in an action under 
     paragraph (1) to amounts less than the amounts permitted 
     under this paragraph.
       ``(5) Admissibility.--In an action described in subclause 
     (I) or (II) of paragraph (1)(A) relating to a denial of a 
     claim for benefits, any determination by an independent 
     medical reviewer under section 503C(d) or 503C(e)(4)(B) 
     relating to such denial is admissible.
       ``(6) Waiver of internal review.--In the case of any cause 
     of action under paragraph (1), the waiver or nonwaiver of 
     internal review under section 503B(a)(4) by the group health 
     plan, or health insurance issuer that offers health insurance 
     coverage in connection with a group health plan, shall not be 
     used in determining liability.
       ``(7) Limitations on actions.--Paragraph (1) shall not 
     apply in connection with any action that is commenced more 
     than 5 years after the date on which the failure described in 
     such paragraph occurred or, if earlier, not later than 2 
     years after the first date the participant or beneficiary 
     became aware of the personal injury or death referred to in 
     such paragraph.
       ``(8) Exclusion of directed recordkeepers.--
       ``(A) In general.--Paragraph (1) shall not apply with 
     respect to a directed record keeper in connection with a 
     group health plan.
       ``(B) Directed recordkeeper.--For purposes of this 
     paragraph, the term `directed record keeper' means, in 
     connection with a group health plan, a person engaged in 
     directed recordkeeping activities pursuant to the specific 
     instructions of the plan, the employer, or another 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 and whose 
     duties do not

[[Page H5264]]

     include making determinations 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.
       ``(9) Protection of the regulation of quality of medical 
     care under state law.--Nothing in this subsection shall be 
     construed to preclude any action under State law against a 
     person or entity for liability or vicarious liability with 
     respect to the delivery of medical care. A cause of action 
     that is based on or otherwise relates to a group health 
     plan's determination on a claim for benefits shall not be 
     deemed to be the delivery of medical care under any State law 
     for purposes of this paragraph. Any such cause of action 
     shall be maintained exclusively under this section. Nothing 
     in this paragraph shall be construed to alter, amend, modify, 
     invalidate, impair, or supersede section 514.
       ``(10) Coordination with fiduciary requirements.--A 
     fiduciary shall not be treated as failing to meet any 
     requirement of part 4 solely by reason of any action taken by 
     a fiduciary which consists of full compliance with the 
     reversal under section 503C (relating to independent external 
     appeals procedures for group health plans) of a denial of 
     claim for benefits (within the meaning of section 
     503C(i)(2)).
       ``(11) Construction.--Nothing in this subsection shall be 
     construed as authorizing a cause of action under paragraph 
     (1) for the failure of a group health plan or health 
     insurance issuer to provide an item or service that is 
     specifically excluded under the plan or coverage.
       ``(12) Limitation on class action litigation.--A claim or 
     cause of action under this subsection may not be maintained 
     as a class action, as a derivative action, or as an action on 
     behalf of any group of 2 or more claimants.
       ``(13) 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.
       ``(14) Retrospective claims for benefits.--A cause of 
     action shall not arise under paragraph (1) where the claim 
     for benefits relates to an item or service that has already 
     been provided to the participant or beneficiary under the 
     plan or coverage and the claim relates solely to the 
     subsequent denial of payment for the provision of such item 
     or service.
       ``(15) Exemption from personal liability for individual 
     members of boards of directors, joint boards of trustees, 
     etc.--Any individual who is--
       ``(A) a member of a board of directors of an employer or 
     plan sponsor; or
       ``(B) a member of an association, committee, employee 
     organization, joint board of trustees, or other similar group 
     of representatives of the entities that are the plan sponsor 
     of plan maintained by two or more employers and one or more 
     employee organizations;

     shall not be personally liable under this subsection for 
     conduct that is within the scope of employment or of plan-
     related duties of the individuals unless the individual acts 
     in a fraudulent manner for personal enrichment.
       ``(16) Definitions and related rules.--For purposes of this 
     subsection:
       ``(A) Claim for benefits.--The term `claim for benefits' 
     shall have the meaning given such term in section 503A(e).
       ``(B) Group health plan.--The term `group health plan' 
     shall have the meaning given such term in section 733(a).
       ``(C) Health insurance coverage.--The term `health 
     insurance coverage' has the meaning given such term in 
     section 733(b)(1).
       ``(D) Health insurance issuer.--The term `health insurance 
     issuer' has the meaning given such term in section 733(b)(2).
       ``(E) Ordinary care.--The term `ordinary care' means, 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 
     claims involved.
       ``(F) 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.
       ``(G) Treatment of excepted benefits.--The provisions of 
     this subsection (and subsection (a)(1)(C)) shall not apply to 
     excepted benefits (as defined in section 733(c)), other than 
     benefits described in section 733(c)(2)(A), in the same 
     manner as the provisions of part 7 do not apply to such 
     benefits under subsections (b) and (c) of section 732.
       (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) Availability of Actions in State Court.--
       (1) Jurisdiction of state courts.--Section 502(e)(1) of 
     such Act (29 U.S.C. 1132(e)) is amended--
       (A) in the first sentence, by striking ``subsection 
     (a)(1)(B)'' and inserting ``paragraphs (1)(B), (1)(C), and 
     (7) of subsection (a)'';
       (B) in the second sentence, by striking ``paragraphs (1)(B) 
     and (7)'' and inserting ``paragraphs (1)(B), (1)(C), and 
     (7)''; and
       (C) by adding at the end the following new sentence: 
     ``State courts of competent jurisdiction in the State in 
     which the plaintiff resides and district courts of the United 
     States shall have concurrent jurisdiction over actions under 
     subsections (a)(1)(C) and (n).''.
       (2) Limitation on removability of certain actions in state 
     court.--Section 1445 of title 28, United States Code, is 
     amended by adding at the end the following new subsection:
       ``(e)(1) A civil action brought in any State court under 
     subsections (a)(1)(C) and (n) of section 502 of the Employee 
     Retirement Income Security Act of 1974 against any party 
     (other than the employer, plan, plan sponsor, or other entity 
     treated under section 502(n) of such Act as such) arising 
     from a medically reviewable determination may not be removed 
     to any district court of the United States.
       ``(2) For purposes of paragraph (1), the term `medically 
     reviewable decision' means a denial of a claim for benefits 
     under the plan which is described in section 503C(d)(2) of 
     the Employee Retirement Income Security Act of 1974.''.
       (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 applicable effective 
     date under section 601.
       Amend section 403 to read as follows:

     SEC. 403. LIMITATION ON CERTAIN CLASS ACTION LITIGATION.

       (a) In General.--Section 502 of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1132), as amended by 
     section 402, is further amended by adding at the end the 
     following:
       ``(o) Limitation on Class Action Litigation.--Any claim or 
     cause of action that is maintained under this section (other 
     than under subsection (n)) or under section 1962 or 1964(c) 
     of title 18, United States Code, in connection with a group 
     health plan, or health insurance coverage issued in 
     connection with a group health plan, as a class action, 
     derivative action, or as an action on behalf of any group of 
     2 or more claimants, may be maintained only if the class, the 
     derivative claimant, or the group of claimants is limited to 
     the participants or beneficiaries of a group health plan 
     established by only 1 plan sponsor. No action maintained by 
     such class, such derivative claimant, or such group of 
     claimants may be joined in the same proceeding with any 
     action maintained by another class, derivative claimant, or 
     group of claimants or consolidated for any purpose with any 
     other proceeding. In this paragraph, the terms `group health 
     plan' and `health insurance coverage' have the meanings given 
     such terms in section 733.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply with respect to actions commenced on or after 
     August 2, 2001. Notwithstanding the preceding sentence, with 
     respect to class actions, the amendment made by subsection 
     (a) shall apply with respect to civil actions which are 
     pending on such date in which a class action has not been 
     certified as of such date.

       Amend section 603 to read as follows:

     SEC. 603. SEVERABILITY.

       (a) In General.--Except as provided in subsections (b) and 
     (c), 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.
       (b) Dependence of Remedies on Appeals.--If any provision of 
     section 503A, 503B, or 503C of the Employee Retirement Income 
     Security Act of 1974 (as inserted by section 131) or the 
     application of either such section to any person or 
     circumstance is held to be unconstitutional, section 502(n) 
     of such Act (as inserted by section 402) shall be deemed to 
     be null and void and shall be given no force or effect.
       (c) Remedies.--If any provision of section 502(n) of the 
     Employee Retirement Income Security Act of 1974 (as inserted 
     by section 402), or the application of such section to any 
     person or circumstance, is held to be unconstitutional, the 
     remainder of such section shall be deemed to be null and void 
     and shall be given no force or effect.
       Page 16, line 10, strike ``on a timely basis'' and insert 
     ``in accordance with the applicable deadlines established 
     under this section and section 503B''.

       Page 29, line 14, strike ``or modify''.
       Page 36, line 12, strike ``upheld, reversed, or modified'' 
     and insert ``upheld or reversed''.
       Page 39, line 23, strike ``uphold, reverse, or modify'' and 
     insert ``uphold or reverse''.
       Page 40, line 8, and page 44, line 9, strike ``or modify''.

       Page 23, line 18; page 41, line 19; page 43, line 2; , , 
     strike ``reviewer (or reviewers)'' and insert ``a review 
     panel''.
       Page 33, line 7, strike ``reviewer'' and insert ``review 
     panel''.
       Page 34, line 25, strike ``reviewer'' and insert ``review 
     panel composed of 3 independent medical reviewers''.
       Page 34, lines 8 and 13; page 36, line 8; page 37, line 3; 
     page 38, lines 6 and 20; page 39, line

[[Page H5265]]

     4, 20, and 21; page 40, lines 1, 2 and 14; page 41, line 6; 
     page 43, lines 6, 17, and 20; page 44, lines 5, 9, and 14; 
     page 45, line 24; page 61, line 5; page 67, line 3; page 68, 
     line 25; , strike ``reviewer'' and insert ``review panel''.
       Page 36, line 14; page 43, line 21; page 44, line 12; , 
     strike ``reviewer's'' and insert ``review panel's''.
       Page 41, line 4, strike ``reviewer (or reviewers)'' and 
     insert ``review panel''.
       Page 47, line 15, strike ``independent external reviewer'' 
     and insert ``independent medical review panel''.
       Page 50, line 20, strike ``1 or more individuals'' and 
     insert ``an independent medical review panel''.
       Page 51, amend lines 4 through 6 to read as follows:
       ``(B) with respect to each review, the review panel meets 
     the requirements of paragraph (4) and at least 1 reviewer on 
     the panel meets the requirements described in paragraph (5); 
     and
       Page 51, line 8, strike ``the reviewer'' and insert ``each 
     reviewer''.
       Page 53, line 21, strike ``a reviewer'' and insert ``each 
     reviewer''.
       Page 54, line 6, strike ``a reviewer (or reviewers)'' and 
     insert ``the independent medical review panel''.
       Page 61, line 5, insert ``or any independent medical review 
     panel'' after ``reviewer''.
       Page 64, lines 1 and 5, strike ``reviewers'' and insert 
     ``review panel''.
       Page 64, line 14; page 69, lines 16 and 19, strike 
     ``reviewers'' and insert ``review panels''.

       Page 8, after line 17, insert the following (and place the 
     text from page 8, line 18, through page 16, line 20 in 
     quotation marks):
       Part 5 of subtitle B of title I of the Employee Retirement 
     Income Security Act of 1974 is amended by inserting after 
     section 503 (29 U.S.C. 1133) the following:

     ``SEC. 503A. PROCEDURES FOR INITIAL CLAIMS FOR BENEFITS AND 
                   PRIOR AUTHORIZATION DETERMINATIONS.

       Page 16, after line 21, insert the following (and place the 
     text from page 16, line 22, through page 25, line 13 in 
     quotation marks):
       Part 5 of subtitle B of title I of the Employee Retirement 
     Income Security Act of 1974 (as amended by section 102) is 
     amended further by inserting after section 503A (29 U.S.C. 
     1133) the following:

     ``SEC. 503B. INTERNAL APPEALS OF CLAIMS DENIALS.

       Page 25, after line 15, insert the following (and place the 
     text from page 25, line 16, through page 69, line 22 in 
     quotation marks):
       Part 5 of subtitle B of title I of the Employee Retirement 
     Income Security Act of 1974 (as amended by sections 102 and 
     103) is amended further by inserting after section 503B (29 
     U.S.C. 1133) the following:

     ``SEC. 503C. INDEPENDENT EXTERNAL APPEALS PROCEDURES.

       Page 119, line 1, insert after ``treatment.'' the 
     following: ``The name of the designated decisionmaker (or 
     decisionmakers) appointed under paragraph (2) of section 
     502(n) of the Employee Retirement Income Security Act of 1974 
     for purposes of such section.''.
       Page 138, line 21, insert after ``plan'' the following: 
     ``and only with respect to patient protection requirements 
     under section 101 and subtitles B, C, and D and this 
     subtitle''.
       Page 145, line 12, strike ``and the provisions of sections 
     502(a)(1)(C), 502(n), and 514(d) of the Employee Retirement 
     Income Security Act of 1974 (added by section 402)''.
       Page 148, line 15, after ``Act'' insert the following: 
     ``and sections 503A through 503C of the Employee Retirement 
     Income Security Act of 1974''.
       Page 149, line 9, after ``Act'' insert the following: ``and 
     sections 503A through 503C of the Employee Retirement Income 
     Security Act of 1974 (with respect to enrollees under 
     individual health insurance coverage in the same manner as 
     they apply to participants and beneficiaries under group 
     health insurance coverage)''.
       Page 152, line 16, insert ``section 101 and subtitles B, C, 
     D, and E of'' before ``title I''.
       Page 155, strike lines 1 through 19 (and redesignate the 
     subsequent paragraphs accordingly).
       Page 158, strike lines 19 through 25 and insert the 
     following:
       ``(b)(1)(A) Subject to subparagraphs (B) and (C), 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 sections 503A, 503B, 
     and 503C, and such requirements shall be deemed to be 
     incorporated into this subsection.
       ``(B) With respect to the internal appeals process required 
     to be established under section 503B, 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.
       ``(C) Pursuant to rules of the Secretary, insofar as a 
     group health plan enters into a contract with a qualified 
     external review entity for the conduct of external appeal 
     activities in accordance with section 503C, 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.
       ``(2) In the case of a group health plan, compliance with 
     the requirements of sections 503A, 503B, and 503C, and 
     compliance with regulations promulgated by the Secretary, in 
     connection with a denial of a claim under a group health plan 
     shall be deemed compliance with subsection (a) with respect 
     to such claim denial.
       ``(3) Terms used in this subsection which are defined in 
     section 733 shall have the meanings provided such terms in 
     such section.''.
       Page 210, line 19, after ``Act'' insert the following: 
     ``and sections 503A through 503C of the Employee Retirement 
     Income Security Act of 1974''.
       Make such additional technical and conforming changes to 
     the text of the bill as are necessary to do the following:
       (1) Replace references to sections 102, 103, and 104 of the 
     bill with references to sections 503A, 503B, and 503C of the 
     Employee Retirement Income Security Act of 1974, as amended 
     by the bill.
       (2) In sections 102, 103, and 104, strike any reference to 
     ``enrollee'' or ``enrollees'' and insert ``in connection with 
     the group health plan'' after ``health insurance coverage'', 
     and make necessary conforming grammatical changes.

  The CHAIRMAN. Pursuant to House Resolution 219, the gentleman from 
Georgia (Mr. Norwood) and a Member opposed each will control 30 
minutes.
  Mr. ANDREWS. Mr. Chairman, I claim the time in opposition to the 
amendment.
  The CHAIRMAN. The gentleman from New Jersey will be recognized for 30 
minutes.
  The gentleman from Georgia (Mr. Norwood) is recognized on his 
amendment.
  Mr. NORWOOD. Mr. Chairman, I yield myself such time as I may consume.
  Mr. Chairman, I rise today to bring before the House an effort at 
bridging the gap on this very difficult and contentious issue. I 
realize that my decision to bring forth this amendment is a 
controversial one, but I hope my colleagues will set aside for an hour 
their bitterness and consider the substance of our proposal.
  I have heard some of my colleagues come to the floor to say that my 
amendment was written by the insurance industry. It is just silly, I 
think, for people to say that. The insurance industry cannot stand me. 
They have had me on dart boards for years, and everyone in the House 
knows that. So let us set aside those insane accusations. Instead, Mr. 
Chairman, let us talk about the substance of the amendment.
  My amendment is consistent with the principles of the underlying 
bill. My amendment creates a cause of action for a negligent denial of 
a claim for benefits. This cause of action against insurers will be 
heard in State court. So does the underlying bill.
  The amendment protects employers by allowing them to have a 
designated decisionmaker to be liable. So does the underlying bill.

                              {time}  1845

  It requires all administrative remedies be exhausted before a case 
can go to court. So the underlying bill, my amendment only allows 
punitive damages in cases where the insurer refuses to follow the 
determination of the external reviewer. So does the underlying bill.
  There are, however, some significant differences. My amendment caps 
liability at $1.5 million for noneconomic damages. Punitive damages are 
capped at $1.5 million. I argued long and hard with almost every friend 
I have against putting caps in a bill for 4 years because we had a 
President who said he would veto a patient protections bill with caps. 
Now we have a President who says he will veto a bill without caps.
  This compromise is a simple recognition of political reality. I have 
made a compromise to create a rebuttal presumption in favor of the 
insurer when the external reviewers rule in favor of the plan.
  I have listened to my colleagues complain long and loud about the 
inequity of that, but I have one simple question in response: If the 
external reviewer says the plan was right in turning down a treatment, 
how could the plan have been negligent in turning down a treatment?
  I know some of my colleagues feel I have made a significant change 
moving away from the simple lifting of the ERISA preemption, but before 
Members condemn differences because they are changes, think about what 
has really changed. Under my amendment, a patient will have a cause of 
action against an insurer in every State in America, in a State court 
using State

[[Page H5266]]

rules and procedures. Is that significantly different from the 
underlying bill?
  I know some of my colleagues believe that the language of my 
amendment preempts the direction of current case law. We worked deep 
into the night last night on that language. I am not completely 
satisfied with the provision in our bill that protects State law, and I 
pledge to Members to work to further clarify the language in conference 
because I know Members know my intent.
  But before Members offhandedly reject the language, I think they 
should explain to us how Americans will be left without a remedy under 
this amendment.
  Mr. Chairman, the key difference between the amendment I am bringing 
before Members today and the underlying bill is that the President has 
agreed to sign the bill with the amendment I am bringing today. With 
all due respect to the gentleman from Kentucky, the amendment I bring 
today is a significant departure from the Fletcher bill.
  The President has moved our way. I know this is not the ideal way to 
offer a potential hand of compromise. I really would not blame Members 
if they voted against the amendment, our Democratic friends, solely 
because of the process issue. But before slapping away the hand that is 
being extended to us, Members, I hope, will consider the substance and 
realize how close we truly are to a law, not a bill. We have done that, 
folks. But a law.
  Mr. Chairman, I reserve the balance of my time.
  Mr. ANDREWS. Mr. Chairman, I yield 2\1/2\ minutes to the gentleman 
from Texas (Mr. Turner), a Member who understands the flaws of writing 
a complicated bill overnight.
  Mr. TURNER. Mr. Chairman, we have heard a lot today from the other 
side about the need for balance between giving patients protections and 
holding down the cost of health insurance premiums.
  In Texas, we have had 4 years of experience under our patient 
protection laws. Health insurance premiums in Texas have gone up at 
less than half the national average, 1,400 patients have exercised 
their right to appeal, and only 17 lawsuits have occurred.
  The original Ganske-Dingell-Norwood bill is modeled after the Texas 
law. I submit to Members, in Texas, it is working. The Norwood 
amendment that is offered here today destroys that balance and tips the 
scales of justice in favor of the insurance companies.
  Let us look at what the Norwood amendment does to the Ganske-Dingell-
Norwood bill. First, it establishes procedural rules that favor the 
insurance company. For example, if the external review panel makes a 
ruling and you decide as a patient to appeal it, you go into court with 
the legal presumption that the medical review panel is correct. And to 
overcome that, patients have to do it by clear and convincing evidence, 
not the usual preponderance of the evidence in most civil cases.
  Secondly, the Norwood amendment imposes this cap on noneconomic 
damages. The gentleman from Florida mentioned that the President would 
not sign a bill without a noneconomic damages cap. That is unusual 
because when the President pushed tort reform in Texas in 1995, there 
was no cap on noneconomic damages. In Texas today, there are no caps on 
noneconomic damages in lawsuits brought against HMOs.
  Thirdly, the Norwood amendment grants the HMO industry special 
protection from accountability that no other business or industry in 
this Nation has to date.
  Fourth, the Norwood amendment requires patients to prove that the 
wrongful and negligent acts of the HMO are the proximate cause of their 
injury rather than a proximate cause of the injury, as in the 
underlying bill. Some Members might ask, What is the big deal, ``A'' or 
``the''? Very simple.
  In a case involving an automobile accident, somebody runs a red 
light, causes an accident, it is pretty easy to say that the running of 
the red light is the proximate cause of the injury. But in malpractice 
cases, there is seldom a single cause of an injury.
  Consider a woman with breast cancer. Her HMO denies her a mammogram 
which would have detected the nodule, she gets cancer and dies. The 
family brings a lawsuit against the HMO. The truth of the matter is, if 
we go with the Norwood amendment requiring the proximate cause, she 
would not recover. Her family would not recover because the proximate 
cause of her death was the cancer. So ``a proximate cause'' is what the 
law should say.
  We need to make sure that the Norwood amendment is defeated.
  Yet under the Norwood amendment, state laws like the Texas Patient 
Protection Law are preempted and patients end up in federal court with 
less protection.
  It leaves the doctor at a disadvantage when the doctor is subject to 
a malpractice lawsuit along with an HMO. The claim against the doctor 
would be in state court under state law. The suit against the HMO would 
be under federal law and in every event would be subject to more 
favorable procedural protections. When HMOs make medical decisions they 
should have no less accountability than doctors must face in this 
country today.
  The Norwood amendment is worse than current law in a lot of ways. It 
rolls back the protections that have been given to patients and their 
doctors in both statutory and common law. Why should we turn our backs 
on the original Ganske-Dingell-Norwood-Berry bill that has already 
passed in a bipartisan fashion in the Senate, a bill that passed this 
House in October of 1999 by an overwhelming majority of the House.
  Mr. NORWOOD. Mr. Chairman, I yield 30 seconds to the gentleman from 
Arizona (Mr. Shadegg).
  Mr. SHADEGG. Mr. Chairman, my colleague from the other side said this 
was modeled, the Ganske-Dingell bill was modeled after the Texas law, 
and it was a wonderful bill.
  Mr. Chairman, I wonder if the gentleman has read page 167 of the bill 
which provides to certain health care plans sponsored by very large 
group providers absolute immunity for nonmedical injuries? The language 
of the gentleman's bill says if there is a self-funded, self-insured 
plan, it gets absolute immunity when someone is injured or killed by a 
nonmedical determination.
  So let us say they wrongfully decide coverage and a patient is 
injured, there is absolute immunity, there is no recovery whatsoever.
  Mr. NORWOOD. Mr. Chairman, I yield 3 minutes to the gentleman from 
Minnesota (Mr. Peterson).
  (Mr. PETERSON of Minnesota asked and was given permission to revise 
and extend his remarks.)
  Mr. PETERSON of Minnesota. Mr. Chairman, I rise today to support the 
Norwood amendment. I first started working on a patient protections 
bill back in September 1992 when I introduced what I think was the 
first patient protection legislation in the House, H.R. 6027.
  Among other things, it tried to make sense out of the way that ERISA 
impacted health services in this country. I have been working on these 
issues ever since.
  It seems to me that we have finally reached the point where both 
sides in this debate have moved enough towards the middle we might be 
able to finally resolve these issues. The Fletcher-Peterson bill that I 
have been involved in has helped move everyone toward the center.
  When the Senate was doing their bill, the Senate passed amendments 
that moved their bill toward the Fletcher-Peterson position. During the 
last few days, the Ganske-Dingell bill has added language to cover some 
of these same provisions, such as including the dedicated decision-
maker language, requiring the full exhaustion of internal and external 
reviews before going to court, keeping contract disputes in Federal 
courts and making adjustments to MSAs.
  The patients' rights issue has come a long way since 1992 when we 
first started on this. Last night we continued that progress with the 
gentleman from Georgia (Mr. Norwood) helping to put together a 
compromise that we could actually pass into law. Last night, to the 
credit of the gentleman from Georgia (Mr. Norwood) and President Bush, 
each gave a little to get a little, and the product of that compromise 
is what we have before us today.
  But are we grateful for this compromise? Are we praising everyone for 
having reached an agreement that is essentially the majority of the 
base bill itself? No. Instead, now, we have shifted the argument to 
other issues, like preemption of State law.
  As I understand it, the Ganske-Dingell bill develops a State cause of 
action in that it modifies it with things

[[Page H5267]]

such as a dedicated decision-maker and other things which are a 
preemption of State law, as far as I can see. That leaves us with the 
question of whether or not, if we are doing that, it is constitutional.
  Can we make Federal conditions on a State cause of action, and is 
this not preemption of State law? The Norwood amendment has created a 
Federal cause of action modified in the same ways. I think it is more 
workable, and I think clearly it will withstand the test of 
constitutionality.
  With regard to the liability provisions, as a result of the 
negotiation with the President, the Norwood amendment increased the 
caps on damages to $1.5 million from the $500,000 that was advocated in 
the Fletcher-Peterson bill.
  The Norwood amendment will protect small businesses and mitigate 
against possible increases of uninsured, as well as improving, health 
care delivery. This amendment finally moves H.R. 2563 to a place of 
agreement, a place where the Patients' Bill of Rights can pass the 
House; and if the other body is willing to work with us in good faith, 
we can ultimately get the President's signature and put this 
legislation into law.
  Mr. Chairman, I encourage each and every one of my colleagues to 
support a real solution to the issue of patients' rights. Support the 
Norwood amendment.
  Mr. ANDREWS. Mr. Chairman, I yield 2 minutes to the gentleman from 
California (Mr. Waxman), who is a champion of consumer groups across 
the Nation that strongly oppose the Norwood amendment.
  (Mr. WAXMAN asked and was given permission to revise and extend his 
remarks.)
  Mr. WAXMAN. Mr. Chairman, I am sorry to say it is hard to escape the 
conclusion that last night President Bush finally put so much pressure 
on the gentleman from Georgia (Mr. Norwood) that in the words of the 
New York Times editorial today he, quote, ``apparently sold out his own 
cause.'' That is sad for Americans who need and deserve a strong and 
enforceable Patients' Bill of Rights.
  Mr. Chairman, I just want to review what the American Medical 
Association concluded about the deal agreed to by their former ally: It 
overturns the good work done by States in protecting patients; it 
reverses developing case laws that allow patients to hold plans 
accountable when they play doctor. In other words, it makes things 
worse instead of better for patients. It provides patient protections, 
but does not allow enforcement of those rights.
  If the White House operatives thought they could defend the so-called 
``compromise'' President Bush talked the gentleman from Georgia (Mr. 
Norwood) into, why did they insist that he make a commitment without 
talking it over with his allies in and out of the government? Why did 
they insist that drafting be rushed through in the wee hours of the 
morning, and insist that they move forward before consumer and 
physician groups and the American public could see and understand the 
provisions?
  Why do we find ourselves here on the House floor voting on an 
amendment that either deliberately or accidentally preempts State laws, 
disadvantages patients, and provides HMOs with a presumption that they 
are right and the patient and physicians are wrong.
  Mr. Chairman, I think the answer is obvious. They knew that if people 
really got a chance to look at this, they would see it for the sham 
that it is.
  This is not the way to enact a Patients' Bill of Rights. This is the 
way to ensure another stalemate. Reject this amendment.

                              {time}  1900

  Mr. NORWOOD. Mr. Chairman, everybody knows that the New York Times is 
not all of our Bible. They get it wrong frequently. They even reported 
I lost 60 pounds; and you know darn well it was 40, so they do not get 
it right.
  Mr. Chairman, I yield 2 minutes to the gentleman from Texas (Mr. 
Barton).
  (Mr. BARTON of Texas asked and was given permission to revise and 
extend his remarks.)
  Mr. BARTON of Texas. Mr. Chairman, my father was a combat navigator 
in World War II. He flew a B-24 liberator on 50 combat missions. He won 
every combat award the Army Air Corps could award except the 
Congressional Medal of Honor. I am glad he did not win that one or I 
would not be here.
  When I got elected to Congress I went to him and I asked him for some 
advice.
  I said: Dad, what should I do when I get up there?
  He said: Son, always pick a good pilot.
  I said: Pick a good pilot. What do you mean?
  He said: There are going to be lots of rascals in Washington and 
they're going to try to flimflam you; but if you've got a good pilot, 
he'll set the right course and he'll always get you home.
  Last week the gentleman from Georgia (Mr. Norwood) was the toast of 
the town on the liberal side because he was holding out for the 
Patients' Bill of Rights. He negotiated an agreement with the White 
House and President Bush which I have looked at this afternoon, it 
looks pretty good to me, and all of a sudden today he is accused of 
selling out.
  Mr. Chairman, the gentleman from Georgia is a good pilot. I would fly 
with him anywhere. The day the gentleman from Georgia sells out is the 
day ``In God We Trust'' that is on the facade behind us falls off that 
facade.
  I am with the gentleman from Georgia, I am going to vote for this 
bill, and I say God bless the gentleman from Georgia, he is a good man.
  Mr. ANDREWS. Mr. Chairman, I yield 1 minute to the gentleman from New 
Jersey (Mr. Pallone), who represents a State that just enacted a very 
strong patient protection law that will be repealed by this amendment.
  Mr. PALLONE. Mr. Chairman, when you are sick and you have been denied 
care and often do not have the energy to fight, the Norwood amendment 
puts all sorts of roadblocks in the way of a real independent review. 
The real Patients' Bill of Rights allows you to quickly and informally 
go to an independent review board. They look at the patient, they look 
at the medical record, look at whatever they want and decide what care 
you need. Norwood turns this around and puts roadblocks in your way. It 
makes it a judicial-type procedure stacked against you. The HMO picks 
the information it sends to the board, the patient has no right to see 
it and no right to ask witnesses any questions. You will need a lawyer 
under Norwood in order to make your case. You have to prove that the 
HMO's decision was wrong and should be either affirmed or overturned. 
There is no flexibility with the board to craft a plan of care 
somewhere in between.
  Worse, if the board agrees with the HMO, a presumption in favor of 
the HMO makes an appeal to the courts almost impossible.
  Norwood stacks the deck against you. And it gives all the cards to 
the HMO.
  Mr. ANDREWS. Mr. Chairman, I yield 4 minutes to the gentleman from 
Iowa (Mr. Ganske), one of the two principal authors of this bill.
  Mr. GANSKE. Mr. Chairman, I thank the gentleman for yielding time.
  Here we are. This is the nitty-gritty of the debate. We have sort of 
been fooling around until we get to the Norwood amendment.
  My colleague from Georgia is an acknowledged expert on this issue. I 
wonder if my colleague would clarify some issues for me.
  The gentleman from Georgia (Mr. Norwood) last night at the Committee 
on Rules agreed that he had said that, quote, ``HMOs will be treated 
better than others in the Norwood amendment.''
  Is that because HMOs are being given affirmative defenses?
  Mr. NORWOOD. Mr. Chairman, will the gentleman yield?
  Mr. GANSKE. I yield to the gentleman from Georgia.
  Mr. NORWOOD. Because there is no way that you can make it exactly the 
same between the physician and the HMO, I do not believe. If the 
gentleman is talking about the rebuttable presumption, and I presume he 
is, what I would say to him there is that I did the best I could do in 
negotiations to continue to allow the patient to have the recourse to 
going into court.
  Mr. GANSKE. But it is fair to say, then, that he stands by his 
statement?

[[Page H5268]]

  Mr. NORWOOD. I stand by the fact that if an insurance company does 
exactly what they are told to do by a group of physicians in the 
external review model, then we have to encourage them to offer the 
treatment and not put them in a position so that they have always the 
fear of being drug into court. But as the gentleman knows, I agree that 
that patient should have the right to go into court.
  Mr. GANSKE. So he stands by his statement that HMOs are treated 
better in his amendment than others.
  Now, is it the gentleman's understanding that his bill would abrogate 
State laws on patients' rights?
  Mr. NORWOOD. It is my understanding and the intent of this bill that, 
first of all, we have a Federal cause of action for denial of care or 
the delay of care in State court. We intend, and it is going to be this 
way before we get it out of that conference if there is any question 
about it, because the gentleman knows how it is with lawyers: ``is'' 
doesn't mean ``is.'' One lawyer says it means this; another lawyer says 
it means that. But our intent is not to preempt any cause of action at 
the State level.
  Mr. GANSKE. Let me just read to the gentleman a statement by Ari 
Fleischer today on this issue. The question to him was:
  Republicans and Democrats believe that the deal struck between Mr. 
Norwood and the President would abrogate State laws on patients' bill 
of rights. Is that the White House understanding?
  Here is what Mr. Fleischer said:
  Yes. Yes. And I think you can get into a good discussion of that at 
the background.
  Question: So he doesn't believe that it would not abrogate State 
laws?
  Fleischer: There are a certain series of preemptions in there.
  Does the gentleman agree with Mr. Fleischer's assessment there?
  Mr. NORWOOD. In some States that presently have a managed care, an 
HMO reform bill, we are going to have a preemption and a replacement in 
that.
  Mr. GANSKE. The gentleman from Georgia has respected the opinion of 
Sara Rosenbaum, David Frankfurt and Rand Rosenblatt. He has sent out 
Dear Colleagues on them. This is what they have to say about the 
Norwood amendment:
  ``In preempting State law, the Norwood amendment goes beyond conduct 
that involves negligent medical judgment to a particular patient's 
case. The amendment made by virtue of the words ``based on'' stipulate 
that State malpractice law does not apply to any treatment decision 
made by the managed care organization, whether it be negligent, 
reckless, willful or wanton. For example,'' Rosenbaum continues, ``no 
State cause of action could be maintained against a designated 
decisionmaker for its decision to discharge a patient early from a 
hospital even if the likely result of that discharge would result in a 
patient's death. In short, all forms of vicarious liability under State 
law would be preempted.''
  Is that an accurate representation?
  Mr. NORWOOD. The key word here is ``may.'' We do not believe that it 
does that. We do not intend for it to do that. And I do not intend for 
it to do that when we have the opportunity to get into conference.
  Mr. GANSKE. I thank the gentleman.
  Mr. NORWOOD. Mr. Chairman, I yield 2 minutes to the gentleman from 
Georgia (Mr. Isakson).
  Mr. ISAKSON. Mr. Chairman, our State's motto is ``Wisdom, Justice and 
Moderation.'' A favorite son of ours today, Dr. Charles Norwood, 
exhibited those three qualities and those three characteristics 
absolutely.
  I do not think a thing in the world I am going to do is going to 
change a mind in here, what I say; but I hope maybe we will get back 
and change our hearts for just a second.
  My granddaddy had a saying in south Georgia when he got into a 
confusing controversy. He said, ``You know, if you want to get the mud 
out of the water, you've got to get the hogs out of the spring.''
  We are at a point in this debate where the focus on self-interest of 
all the diverse interests on this bill is clouding the water. We have 
made steps forward in patients' rights. We have made steps forward in 
the amount that can be received in noneconomic and punitive damages. We 
have made steps forward in protecting the fact that Americans are still 
going to have insurance and joint and several liability will not sweep 
through American business.
  Some can poke fun at the gentleman from Georgia if they like, and you 
can ask me hard questions I cannot answer; but successful legislation 
in America on behalf of the people we are here to represent who are our 
citizens, are going to be the patients, are better than the muddy water 
interests of any lawyer, any business employer, any physician, any HMO 
or any insurance company.
  There comes a time and a place for a man to do what is right. Dr. 
Charles Norwood has done what is right. You may disagree, but we are 
light years ahead of where we have ever been; and we owe this debate 
better than some of the things that have been said.
  I urge your support for the Norwood amendment.
  Mr. ANDREWS. Mr. Chairman, I yield 2 minutes to the gentleman from 
Texas (Mr. Green) to comment on the bill that is before us rather than 
the one he wishes was before us.
  Mr. GREEN of Texas. Mr. Chairman, first I want to say that I respect 
the gentleman from Georgia (Mr. Norwood) and the hard work that he has 
done; but I also disagree with the language that was agreed to, and I 
can stand here on this floor and still respect him but disagree with 
him.
  The President and the gentleman from Georgia stood last night on the 
podium and proclaimed they reached a compromise. But it is really not a 
compromise. It is not a compromise because not everybody was involved. 
Only one Member was involved in it. The Norwood amendment holds HMOs to 
different standards than doctors and hospitals. That was the base 
reason for the bill. We are going to hear lots of Members come up 
tonight and talk about how this is a great bill, but they were for the 
Fletcher bill. They were not for a real patients' bill of rights, 
anyway. So we are going to hear that tonight. Even though HMOs act like 
doctors if they deny or delay care, they are not held accountable like 
doctors under this amendment. They are the only health care providers 
that are shielded. That is what is wrong.
  What is more troubling about this proposal is that it destroys the 
important patient protections that we have had in Texas for 4 years. 
The gentleman from Arizona (Mr. Shadegg) may quote Texas law, but the 
amendment that the gentleman from Georgia negotiated with the President 
goes against Texas law. It does not have anything to do with holding an 
employer who runs the business. That is Texas law. We wanted to correct 
that in this bill. But it does change the liability. And it does change 
the presumption.
  There is nothing in Texas law that gives the HMO or the insurance 
company the presumption that they are right. That is wrong. That is why 
our appeals are so successful in Texas. That is why 52 percent of the 
1,400 appeals were in favor of the patient. The HMOs that you are 
defending were wrong more than half the time. That is what is wrong 
with this law. That is why it is so bad. It is going to hurt what we 
have successfully done in Texas where the insurance policies are under 
State law. But we need to do a real patients' bill of rights for 
everyone in the country. Sixty percent of my constituents do not come 
under Texas law; they come under ERISA. That is why we need to make 
sure we pass a strong patients' bill of rights, not a patients' bill of 
wrongs, not an HMO bill of rights. That is what this is.
  You heard the gentleman from Texas (Mr. Turner) talk about just the 
changing of an ``a'' to a ``the'' will make sure our patients are 
shafted by this bill.
  Mr. ANDREWS. Mr. Chairman, I am pleased to yield 1\1/2\ minutes to 
the gentlewoman from Texas (Ms. Jackson-Lee).
  (Ms. JACKSON-LEE of Texas asked and was given permission to revise 
and extend her remarks.)
  Ms. JACKSON-LEE of Texas. Mr. Chairman, let me simply say I am 
trained as a lawyer. But today I stand on this floor as someone who has 
been, as many of us, a patient. I would like to cast my lot with the 
physicians. And though I agree with the gentleman, I do not want a 
bill; I would like to have a law. But I am prepared as a patient

[[Page H5269]]

to fight to the last breath so that patients around the country can 
have the privilege of knowing that decisions between them and their 
physician are not interfered with by HMOs.
  I know the gentleman from Georgia means well and we do respect him. 
But his amendment interferes and puts a wedge between the patient-
physician relationship. Our people understand what is right and what is 
wrong. Under the presumption in his amendment, patients are wrong, 
physicians are wrong and HMOs are right. Interestingly enough, the 
George Washington University in a letter dated today said that this 
amendment stipulates that State malpractice law does not apply to any 
treatment decision made by a managed care organization whether it be 
negligent, reckless, willful or wanton.
  Picture yourself in a relationship with a doctor. They recommend a 
diagnosis; they ask for a procedure. And there you are with an HMO that 
denies it, recklessly, willfully and wantonly and God help that you 
live and if you do not, look at your relatives going in to challenge 
them, not because they want to be in court but because they want to 
right the wrong and the HMO stands as the right and you stand as the 
wrong.
  I fight for the patients, and I fight for the physicians. I think 
this amendment should go down.

                              {time}  1915

  Mr. NORWOOD. Mr. Chairman, I yield 2 minutes to my lawyer, the 
gentleman from Arizona (Mr. Shadegg).
  Mr. SHADEGG. I thank the gentleman for yielding me time.
  Mr. Chairman, let me begin by saying I respect greatly our colleague, 
the gentleman from Iowa (Mr. Ganske), who has worked very hard on this 
bill; but I think it is important to note he talked about the issue of 
affirmative defenses. In the negotiations between the gentleman from 
Georgia (Mr. Norwood) and the President, all of the affirmative 
defenses were stricken from the bill because the gentleman from Georgia 
(Mr. Norwood) wanted them stricken and they are gone.
  Let us talk about this, the other issue of preemption. I need to talk 
about preemption, because a great deal has been made here. Let us talk 
about the issue of preemption, because that seems to be of great 
concern here.
  It needs to be understood that, number one, ERISA today preempts a 
claim for benefits in all 50 States. If you try to bring a claim for 
benefits and bring that as a cause of action in State court, you cannot 
bring it in a single State, including Texas. Indeed, the corporate 
healthcare case, Corporate HealthCare v. Texas right here, says 
specifically that. If you seek to bring a claim for benefits case in 
State court, it is preempted by Federal law.
  There is a good reason for that. It is so that the management of 
claims in all 50 States can be uniform, because this law, ERISA, was 
intended to govern multi-State employers and multi-State unions.
  Now, let us talk about a second issue, that is the Ganske bill. They 
would have you believe that the Norwood amendment is the only thing 
that preempts anything. That is ridiculous. The Ganske-Dingell bill 
preempts issue after issue within the State cause of action. It says 
you can bring a State cause of action, but then it preempts pieces of 
that. It says you can only bring it against a designated decisionmaker, 
it says you can only bring it after exhausting external review. The 
preemption issue is in your bill as well as our bill, although it is 19 
pages long in your bill.
  Let us talk about its effort at preemption in this bill. In this 
bill, we say what current law says, and that is if you are bringing a 
claim for benefits, that belongs in Federal court. But, do you know 
what? We give a remedy for damages.
  But we also go beyond and codify existing State law on the issue of 
the claims you can bring in States. If you bring a negligence claim 
against a plan or its doctor, you can bring that for the services they 
delivered, you can bring that under existing State law, and this bill 
specifically says you can continue to bring it.
  This is a red herring. I urge the adoption of the Norwood amendment.
  Mr. ANDREWS. Mr. Chairman, I yield myself 15 seconds.
  I believe the gentleman from Arizona said affirmative defenses are 
not spelled out in the Federal cause of action. That is right. Of 
course, that means it is up to the judiciary to invent them as we go 
along. We do not know whether there will be affirmative defenses or 
not, what they will mean, because it is not included in here. Because 
when you draft a cause of action overnight, you cannot think of those 
things.
  Mr. Chairman, I yield 1 minute to the gentleman from Massachusetts 
(Mr. Markey).
  Mr. MARKEY. Mr. Chairman, I thank the gentleman for yielding me time.
  Make no mistake, the Norwood amendment guts the patients' bill of 
rights, and what is left behind? Nothing more than an ``HMO Bill of 
Slights.''
  The Norwood amendment slights patients with weakened accountability 
provisions; it slights patients by preempting stronger State laws, 
which would allow patients to sue HMOs for bad medical decisions; it 
slights patients by prohibiting class action lawsuits against HMOs; and 
it slights patients by allowing HMOs to delay a patient's day in court 
by choosing Federal court over State court.
  Mr. Chairman, justice delayed is justice denied. The American people 
have waited too long for a real HMO bill of rights. Vote no on the 
Norwood amendment, the ``HMO Bill of Slights.''
  Mr. NORWOOD. Mr. Chairman, I am pleased to yield 1 minute to the 
gentleman from Georgia (Mr. Deal), a good friend of mine.
  Mr. DEAL of Georgia. Mr. Chairman, I thank the gentleman for yielding 
me time.
  As a trial attorney, I am both amused and somewhat dismayed by some 
of the things that have been said here today. First of all, as a trial 
attorney, it is amusing it see my good friend the plastic surgeon 
cross-examining my other good friend, a dentist. But be that as it may, 
there are a lot of things that have been said here.
  First of all, on the issue of preemption, I think the gentleman from 
Arizona (Mr. Shadegg) said it well. If States could do the things that 
we are seeking to do in this legislation, then let States to it. It is 
the very fact they cannot that is the necessity for the Federal 
legislation that we are attempting to put in place here today.
  On behalf of my friend the gentleman from Georgia (Mr. Norwood), let 
me say this in conclusion. Many who would speak against his efforts 
have been here for decades and saw no reason to go forward with the 
effort of a patients' bill of rights, and to them I say, the gentleman 
from Georgia (Mr. Norwood) should be your hero.
  For those who would denigrate his methods or motives, I would simply 
say to them, this issue would not be here today on the brink of 
becoming law had it not been for his dedication.
  For those of you who think the gentleman from Georgia (Mr. Norwood) 
has sold out, it simply proves to me, you do not know the gentleman 
from Georgia (Mr. Norwood).
  Mr. ANDREWS. Mr. Chairman, I yield 1 minute to the gentlewoman from 
California (Ms. Lofgren), one of our advocates for a strong and 
forceful patients' bill of rights.
  Ms. LOFGREN. Mr. Chairman, it has been quite a week here in the House 
of Representatives. On Tuesday, we made it a felony for scientists to 
cure disease with stem cells; Wednesday, we gave $36 billion in tax 
goodies to big oil, gas and others, and allowed drilling in national 
refuges; and today, we see the perversion of a good idea, a law that 
would protect patients from insurance companies has been transformed 
into a bill that protects insurance companies from patients.
  The President's deal was obviously written by, or at least for, 
special interests. It would repeal California's responsible law and 
replace it with a new Federal preemption that would prevent wrongdoers 
who are insurers, even intentional wrongdoers, from being held 
responsible for their actions.
  Now, why is it that doctors, lawyers, nurses can be held responsible 
for their wrongdoing, but not insurance companies? It looks to me that 
the bigger the campaign contributions to the Republicans, the bigger 
the payoff with laws to benefit those same contributors.
  This body has morphed from a place where legislation is deliberated 
upon to the White House ATM machine. This

[[Page H5270]]

 week, start by making scientists criminals; midweek, trash the 
environment; today, destroy the patients' bill of rights.
  It is a good thing Congress is about to recess. I do not know if the 
country could stand another week like this one of Republican 
``victories,'' where the special interests rule to the detriment of 
ordinary Americans.
  Mr. ANDREWS. Mr. Chairman, we hear often about the benefits of the 
Texas patients' bill of rights, which will be repealed as a result of 
this amendment.
  Mr. Chairman, I yield 1 minute to the gentleman from Texas (Mr. 
Bentsen).
  Mr. BENTSEN. Mr. Chairman, I thank the gentleman for yielding me 
time.
  Mr. Chairman, let me start out by saying I have nothing but the 
highest respect for the gentleman from Georgia (Mr. Norwood). The 
problem is, the gentleman from Georgia (Mr. Norwood) went as far as 
could go, and he ran into the White House. It is ironic, after being 
here for 7 years, coming from a State where my former Governor used to 
say, let Texans run Texas, and where my Texas colleagues up here on the 
other side of the aisle said, let the States do it, because the States 
can do it better, what always happens, whenever it gets in the way of 
the powerful special interests, this idea of devolving power to the 
States becomes wholly inconvenient.
  The bill before us today would upend the law in Texas that passed 
under George Bush's watch, the law he talked about during the campaign 
that he was so proud about. But the fact is, that it upends the 
interests of very powerful insurance companies who do not like the 
Texas law, they do not like the California law, they do not like the 
New Jersey law.
  Now we are told we have to pass a bill in the House before conference 
so we can get to conference, and then the gentleman from Georgia (Mr. 
Norwood) has turned around and told us if there are problems with it, 
we will work it out in conference.
  It all seems rather inconsistent. Defeat the Norwood amendment, and 
let us pass a real patients' bill of rights.
  Mr. ANDREWS. Mr. Chairman, the American Medical Association, health 
care providers across the country, want the Norwood amendment defeated.
  Mr. Chairman, I yield 1 minute to the gentlewoman from California 
(Ms. Capps), a representative of the nursing profession before she came 
here.
  Mrs. CAPPS. Mr. Chairman, I rise in opposition to the Norwood 
amendment.
  In the absence of action by the Federal Government, my State of 
California recently acted to protect its citizens from overzealous 
cost-cutters in the HMOs. One of the strengths of Ganske-Dingell is it 
creates a Federal floor for patient protections, allowing States like 
my own to have stronger protections.
  But this amendment would override those State laws in order to 
protect HMOs from accountability. As was confirmed in an exchange just 
now between the gentleman from Iowa (Mr. Ganske) and the gentleman from 
Georgia (Mr. Norwood), this amendment obliterates the cause of action 
defined by the State of California, my State, and so many other States 
as well.
  If this amendment were to pass, patients in my home State would have 
fewer protections than they do right now, and HMOs in California would 
have more freedom to abuse them.
  This amendment will do worse than take the teeth out of the Ganske-
Dingell bill; it will take the teeth out of state protections. So I 
oppose the Norwood amendment, and I urge my colleagues to do the same.
  Mr. NORWOOD. Mr. Chairman, it is my pleasure to yield 1 minute to my 
friend, the gentleman from New York (Mr. Houghton).
  Mr. HOUGHTON. Mr. Chairman, before I begin, I just want to thank a 
couple of people who have spent an enormous amount of time on this, 
Francesca Tedesco and also Kathy Rafferty. I want to thank the 
gentleman from Georgia (Mr. Norwood).
  What the gentleman from Georgia (Mr. Norwood) has done is very, very 
significant. I say this because I come from the world of business. You 
can have a patient, you can have a patient's rights, but if you do not 
have the funding for that patient, it does not do any good.
  What the gentleman from Georgia (Mr. Norwood) has done is bridge the 
gap and made it possible for those people, not only in large and small 
businesses, and small businesses, as you know, comprise 75 percent of 
the employment in this country, it enables them now to buy into a 
program which they feel they can afford, without having the sword of 
liability, unending liability, hanging over their head.
  I think a lot of people are going to be thanking the gentleman from 
Georgia (Mr. Norwood) for bridging this gap, because it would not have 
happened without him.
  Mr. ANDREWS. Mr. Chairman, I am pleased to yield 1 minute to the 
gentleman from Texas (Mr. Sandlin), another Texan who does not want his 
State law repealed by the Norwood amendment.
  Mr. SANDLIN. Mr. Chairman, I rise in strong opposition to this 
outrageous amendment. For patients, this amendment is a lose-lose 
situation. It is heads, the HMOs win, and tails, the patients lose.
  Just a couple of points. This presumption, do you realize there is a 
rebuttable presumption that creates a hurdle so high that patients will 
never be able to recover? I have been in this situation before.
  Do you know that courts will be giving written instructions to juries 
to say the insurance company won before and the insurance company ought 
to win again, and that is the burden you are putting on them.
  You are also increasing the burden on punitives. You are making it 
outrageous. You are increasing it to clear and convincing. That will 
never happen.
  The biggest fraudulent change of all was done in the dark of the 
night where the standard was changed from a proximate cause to the 
proximate cause. That was not done by accident, it was done to gut the 
entire bill. If someone dies from a heart attack, for example, and was 
denied treatment, the death will not be from the lack of treatment, it 
will be from the heart attack, and they lose.
  This entire bill has been gutted. We all know what happened. We 
worked 5 years on this bill, and last night it was undone in a matter 
of minutes, and we know what happened.
  Mr. ANDREWS. Mr. Chairman, I am pleased to yield 1\1/2\ minutes to 
the gentlewoman from Connecticut (Ms. DeLauro).
  Ms. DeLAURO. Mr. Chairman, I rise in opposition to the Norwood 
amendment. It overturns the painstaking work that has been done over 
the past 5 years to craft a good piece of legislation that said that we 
are going to protect patients in this country, that we are going to 
protect their families.
  It essentially establishes an HMO bill of rights. It affords 
insurance companies and HMOs a special status. It literally gives them 
the ability to act with impunity, that is, to make medical decisions 
that overrule doctors and harm patients; and, my friends, they never 
have to face the consequences of their actions.
  It is the first time, and now legally the presumption is that the HMO 
is right, and you have to prove them wrong. That is what happened at 
the White House last night.
  The Bush-Norwood amendment is just another example of President Bush 
siding with the special interests over hardworking American families by 
carving out special protections for the HMOs. This amendment rolls back 
patient protection, it walks all over States' rights.
  My God, the other party is always talking about States making their 
decisions, individuals making the decisions, except when it conflicts 
with the rewards for their special interest friends.
  Vote against the Norwood amendment.
  Mr. ANDREWS. Mr. Chairman, I am pleased to yield 1 minute to the 
gentlewoman from Ohio (Mrs. Jones), a strong voice against special 
interest legislation.
  Mrs. JONES of Ohio. Mr. Chairman, I rise in opposition to the Norwood 
amendment. It is very easy to speak in a vacuum about the impact that 
legislation has on the Federal level in State courts.

                              {time}  1930

  But the reality is, with the lack of time dedicated to this 
particular legislation, we do not really know what in

[[Page H5271]]

heck it will have. In fact, we worry, and I am sure the gentleman from 
Georgia (Mr. Norwood) worries as well, that people's ability to bring 
claims in State courts have been, in fact, affected by this 
legislation.
  Many of my colleagues may have had the opportunity to think about 
what happens in a courtroom, but I served in a courtroom for 10 years. 
One of the dilemmas about having legislation that is passed and saying 
in the State court, this is the impact we think it is going to have, is 
that it will ultimately take someone's case to work its way through the 
State court, through the appellate court, and then to the Supreme Court 
to resolve it.
  So why, when we are people of good sense, can we not resolve it right 
here and understand and put in place legislation that will not have 
that type of impact?
  Mr. Chairman, I rise in opposition to this legislation.
  Mr. NORWOOD. Mr. Chairman, it is a pleasure to yield 1\1/2\ minutes 
to the gentleman from Tennessee (Mr. Hilleary).
  (Mr. HILLEARY asked and was given permission to revise and extend his 
remarks.)
  Mr. HILLEARY. Mr. Chairman, I am a proud supporter of the Norwood 
amendment and I commend the gentleman from Georgia and the President 
last night for breaking the logjam on the Patients' Bill of Rights.
  The Norwood amendment affects only liability. We are all in agreement 
on the medical care side of this debate. The only debate is over where 
the available money for health care will go, to the patients or the 
cost of litigation.
  The Norwood amendment calls for full compensation to the patient for 
economic damages caused by an HMO. In other words, patients are 
completely compensated and reimbursed for the money the HMO actually 
caused them to lose. In addition, the Norwood amendment allows up to $3 
million for pain and suffering and punitive damages. That is a lot of 
money, but not so much money as to create massive numbers of new, 
frivolous lawsuits.
  The Ganske bill, on the other hand, allows for unlimited punitive and 
economic damages. This will be a tremendous enticement for frivolous 
lawsuits. Thus, way too much of the precious limited money available 
for patient health care will be chewed up in the litigation of these 
lawsuits, not for health care.
  The bill of the gentleman from Iowa (Mr. Ganske) also makes an 
effort, although an inadequate effort, to close off lawsuits against 
businesses which had absolutely nothing to do with the HMO's unlawful 
act. No business in its right mind will offer insurance or any kind of 
health care benefits to its employees if they can be sued for something 
they did not do.
  If we want a legitimate Patients' Bill of Rights that actually wants 
a chance to become law this year and help these people we keep talking 
about, I strongly urge my colleagues to vote for the Norwood amendment.
  Mr. NORWOOD. Mr. Chairman, it is a pleasure to yield to the gentleman 
from Ohio (Mr. Boehner), the chairman of the Committee on Education and 
the Workforce.
  Mr. BOEHNER. Mr. Chairman, let me thank the gentleman for yielding me 
time, and let me say that all of us, I think, owe the gentleman from 
Georgia (Mr. Norwood) a great big thank-you. The gentleman has been at 
this for 6\1/2\ years as a Member of Congress.
  I know when I went to his district in 1994 and campaigned with him, 
we went around his district, we spent 16 hours in a bus going to about 
16 small towns in eastern Georgia. Those constituents in that district 
wanted a Patients' Bill of Rights.
  The gentleman came up here, and we all know, every Member of Congress 
knows, there is nobody in this body who has worked harder, nobody who 
has put more heart and soul into trying to find the right language that 
will be signed into law than the gentleman from Georgia (Mr. Norwood), 
and we owe him a great big thanks.
  Everybody thinks there is some big fight here, that there is some 
huge difference. Let us put it all back in perspective.
  The bill we have here is an identical bill. We have one bill. The 
only big argument is over how much more liability we are going to 
impose on insurers and on employers.
  The amendment offered by the gentleman from Georgia basically says 
that we are going to expand remedies and we are going to expand 
liability from where we are today, and we are going to give people 
easier access to courts. Our friends on the other side have an even 
greater expansion of liability in State and Federal courts, and what 
their language will do is drive employers out of the system, will drive 
up costs for employers and their employees. It will damage the 
foundation of our health insurance system today, which is employer-
provided coverage.
  What we are trying to do here is to find some common ground, and I 
think the gentleman from Georgia (Mr. Norwood), working with the 
President, has found common ground that will give patients in America 
greater access to the courts, greater remedies, bringing greater 
accountability. Not as much as we have on the other side, but our bill 
will not drive employers out of the system; it will not drive up costs. 
It is a reasonable compromise that the American people expect us to 
deliver for them.
  Mr. ANDREWS. Mr. Chairman, it is my privilege to yield 2 minutes to 
the gentleman from Iowa (Mr. Ganske), the principal voice for patients 
around America.
  Mr. GANSKE. Mr. Chairman, I have here a ``Dear Colleague'' that was 
sent out by the gentleman from Georgia on August 1. It says, ``An 
explanation of how ERISA preemption works.'' It says, ``Under H.R. 
2563,'' that is the base bill, the Ganske-Dingell bill, ``if an insurer 
injures you by denying or delaying medically necessary care, you can go 
to State court under common law to hold the insurer accountable.'' That 
has been a fundamental part of the bill.
  So it surprised me greatly when I read on page 20 of the Norwood 
amendment these words: ``A civil action brought in any State court 
under section'' such and such ``against any party other than the 
employer plan, plan's sponsor or any other entity, i.e., dedicated 
decision-maker, arising from a medically reviewable determination may 
not be removed from any district court.''
  What this basically means is that all of those groups can go into 
Federal, and that gets to then this interesting part of the Norwood 
bill. I mean, this could be interpreted as unconstitutional under 
Pegram v. Hedrick.
  But then, at the end, we have a nonseverability clause, so that the 
entire enforcement section becomes inoperative if one section in the 
Norwood amendment is unconstitutional.
  Mr. Chairman, I am just amazed at this. I know the gentleman from 
Georgia in the past has fought against putting nonseverability clauses 
in.
  Mr. DINGELL. Mr. Chairman, will the gentleman yield?
  Mr. GANSKE. I yield to the gentleman from Michigan.
  Mr. DINGELL. Mr. Chairman, all of that dies, but the preemption 
clause remains, and, as a result of this, the subscriber to the health 
care plan is left totally naked and devoid of any protection or any 
rights to enforce his interests in his policy.
  Mr. NORWOOD. Mr. Chairman, I am pleased to yield 2 minutes to the 
gentleman from Ohio (Mr. Portman).
  Mr. PORTMAN. Mr. Chairman, I thank the gentleman from Georgia.
  I just want to make the point that we just heard from the other side 
that somehow cases that are in State court would be removed to Federal 
district court. That would not happen under the Norwood amendment. It 
would be in State court with a Federal cause of action.
  So I do not know what the point of that last statement was, but we 
are in State court, and that is a change. That is a change that the 
gentleman from Georgia (Mr. Norwood) brought to this debate.
  I am a strong supporter of the Norwood amendment and I am also a 
strong supporter of the underlying bill.
  I want to back up for a second and talk about why we are here. Eight 
years ago when I got elected to Congress, we were talking about the 
Patients' Bill of Rights, and it was about access to emergency room 
care, it was about access to OB-GYNs, it was about access to 
specialists, it was about access to clinical trials. All of this is in

[[Page H5272]]

this underlying legislation. This is the Patients' Bill of Rights we 
have been talking about for all of the 8 years I have been here.
  But while this bill provides all of these patient rights, it also 
provides the single most important protection of all, and that is 
health care insurance coverage. It provides the right balance, yes, 
making HMOs and other insurance companies accountable; yes, providing 
access to the courts when one is aggrieved; but not raising the cost of 
health care insurance to the point that we is risking health care 
coverage for literally millions of Americans. That is the most 
fundamental protection of all. It is the right balance.
  It is easy around this place to criticize. It is easy to be partisan, 
and we have heard some of that today on the floor. We have even heard 
some allegations of bad motives. We have even heard some allegations of 
corruption earlier on the floor. That is easy. What is harder is to get 
something done for the American people.
  The American patient has waited too long. I commend the gentleman 
from Georgia (Mr. Norwood) for working hard on this issue not only for 
all of the time he has been in Congress, but over the last month, for 
working hard to find a bill that this President can sign and that 
provides the fundamental patients' rights that we have talked about and 
that provides the fundamental accountability for HMOs, and that 
delivers for the American people.
  That is what this place is all about. That is the heavy lifting. I 
commend the gentleman from Georgia (Mr. Norwood).
  Mr. ANDREWS. Mr. Chairman, I yield 2 minutes to the gentleman from 
Arkansas (Mr. Berry), one of the leaders throughout this effort, a real 
expert on this matter.
  Mr. BERRY. Mr. Chairman, I thank the gentleman from New Jersey, and I 
thank him for his leadership, along with many others that have worked 
hard on this issue. The gentleman from Iowa (Mr. Ganske) has worked 
tirelessly and continues to work tirelessly in the interests of 
patients, particularly children.
  It has been an interesting day. We have heard a lot of rhetoric on 
this floor. I have been almost amused. I say ``almost.'' This would be 
funny, it would be amusing if it was not such serious business. I have 
heard my colleagues on this side of the aisle stand in the well and 
talk about how our bill allows us to sue like they are proud of it. But 
this bill over here is a terrible thing; it lets you sue also.
  Like I say, if it was not for the serious nature of this, it would be 
funny.
  Meryl Haggart, a great country singer, has this song that he sings, 
made probably back in the 1980s, called Rainbow Stew. It says, ``When a 
President goes through the White House door and does what he says he 
will do, we will all be drinking that free bubble-up and eating that 
rainbow stew.''
  This is the biggest batch of rainbow stew I have ever seen. That is 
what it is, folks. It is rainbow stew. That is what your constituents 
are going to get is rainbow stew.
  I carry this buckeye in my pocket. It is a worthless little old 
thing. Folklore in Arkansas says if you carry one, it will bring you 
good luck and keep rheumatism away if you rub it just right. You have 
got to know how to rub it. That is what this is going to be worth to 
the American people.
  Now, we have heard over and over that the real important thing about 
this is, it will be signed into law. If this ever gets signed into law, 
I will come to this floor, ask for unanimous consent, and stand on my 
head and stack BBs. And I am not in too good a shape. I think it would 
be very difficult.
  I urge this body not to do something so foolish as to vote for this 
amendment.
  Mr. NORWOOD. Mr. Chairman, I yield 1 minute to the gentleman from 
Texas (Mr. Culberson), a new Member of Congress who, I think, is a 
great addition to this Chamber.
  Mr. CULBERSON. Mr. Chairman, I rise in very strong support of the 
Norwood amendment, because I am completely committed to protecting the 
10th amendment right of the States to enact a Patients' Bill of Rights.
  I came here on January 3 after serving 14 years in the Texas house. I 
am a coauthor of the Texas patients' bill of rights. I served longer 
under Governor Bush than any other governor. I helped carry all of his 
tort reforms in 1995. I helped pass this patients' bill of rights in 
Texas in 1997. So I know firsthand that this legislation the gentleman 
has drafted does not preempt the Texas patients' bill of rights, as has 
been stated. This bill protects the rights of States to regulate health 
care and to pass medical malpractice laws.
  Mr. Chairman, I know that George W. Bush is a man of honor, 
integrity, and a man of his word; and he and the gentleman from Georgia 
(Mr. Norwood) have both given us their word that if there is any doubt 
that this bill would in any way preempt or restrict the rights of the 
States to regulate health care or protect patients' rights, they will 
fix it in conference. I believe the language they have now protects the 
rights of States.
  I strongly support the amendment, and I urge Members who believe in 
the rights of States to protect the rights of patients at the State 
level to support this legislation.

                              {time}  1945

  Mr. ANDREWS. Mr. Chairman, I yield 2\1/2\ minutes to the gentleman 
from Michigan (Mr. Dingell), a giant in this institution, the dean of 
the House of Representatives and our great friend.
  (Mr. DINGELL asked and was given permission to revise and extend his 
remarks.)
  Mr. DINGELL. Mr. Chairman, I think it is time for us to look at this 
as what it is. I am told by my good friend on the other side that the 
problem here is lawsuits. I am sure they have trouble with that.
  My problem is without some mechanism for the American citizen to 
think his rights are being properly protected in the courts of law, 
there is no sustainable right for that American citizen.
  I had a good friend who called me up not long back. He is a doctor of 
medicine, very much respected. He had been serving as an appeals 
officer for an HMO since he retired. He said, Dingell, you do not know 
it but they just fired me. I said, Doc, tell me why they did it. He 
said, They said I was making medical decisions instead of insurance 
decisions.
  That is the issue here before us. We want to see to it that we still 
have medical decisions being made in favor of, and on behalf of, the 
patients. This is to see to it that the HMOs are treated the same as 
anybody else, not given preferential and reverential treatment.
  That is what the Norwood amendment does. It shelters them against 
litigation. Worse than that it preempts State law; and in the process 
it jiggers the rules of evidence, the weight of the proceedings, the 
manner of proceedings, so that the hand of the Government is weighing 
heavily on the scales of justice against the citizen who has lost a leg 
or a wife or a husband or who has been injured by HMOs engaging in the 
practice of medicine.
  If an American citizen cannot go to court to get relief and help 
under those situations, the value of his citizenship has been shrunk, 
and it will be shrunk by the Norwood amendment if it is adopted. Just 
remember what I stated about my friend who was fired for making medical 
decisions instead of insurance decisions.
  Now, it does preempt the laws of the States now in existence; and it 
weighs the new proceedings against the person who wishes to complain to 
his government about having been wronged by an HMO. I have here in my 
hands a letter which I will insert in the Record at the appropriate 
time from the insurance commissioner from the State of Michigan, a good 
Republican official, who complains that the law of the State of 
Michigan is being usurped by the amendment offered by my good friend 
from Georgia. Protect my citizens, if you will not protect your own, 
against that kind of outrage.
                                           Office of Financial and


                                           Insurance Services,

                                      Lansing, MI, August 2, 2001.
     Michigan Congressional Delegation,
     House of Representatives, Washington, DC.
       Dear Representatives: I am contacting you again with regard 
     to an amendment that is being proposed to the patients' bill 
     of rights legislation. It has come to our attention that the 
     Norwood amendment contains a provision that would preempt all 
     State internal and external review laws. States would not be 
     allowed to certify and retain these laws. The internal and 
     external review process would be federalized.

[[Page H5273]]

       I oppose the portion of the Norwood amendment that would 
     preempt the Michigan Office of Financial and Insurance 
     Services' ability to implement, oversee and enforce 
     Michigan's statutory internal and external grievance 
     procedures. Michigan was one of the first states to implement 
     both an internal and external grievance procedure when it 
     enacted its patient's bill of rights in 1996. Then again in 
     2000, the Michigan Legislature, with Governor Engler's 
     support, enacted the Patient's Right to Independent Review 
     Act (PRIRA-2000 PA 251) that provided sweeping changes to the 
     external review procedure and shortened (considerably) the 
     time frames for the internal review procedures. PRIRA took 
     effect October 1, 2000.
       I am asking for your help in resolving this preemption 
     issue as the process moves forward. The Senate bill allows 
     states to certify state laws and therefore retain their 
     internal/external reviews, so this issue will be a point of 
     negotiation in conference. It would be very helpful if enough 
     Members objected to this provision in the Norwood amendment 
     so that it is highlighted for those conference negotiations. 
     If States are not allowed to retain jurisdiction over the 
     internal and external review process then their ability to 
     oversee other protections will be severely limited.
           Very truly yours,
                                              Frank M. Fitzgerald,
                                                     Commissioner.

  Mr. NORWOOD. Mr. Chairman, I yield myself such time as I may consume.
  The CHAIRMAN. The gentleman from Georgia has 7 minutes.
  Mr. NORWOOD. Mr. Chairman, this is not the ideal process I would have 
designed for this debate today. I am disappointed that some of my 
colleagues have allowed their passionate feelings about process to lead 
them into making dubious statements about substance, because this 
debate most assuredly should be about substance.
  I would like to remind my colleagues of what my amendment provides 
for injured patients. A patient who is injured when an insurer makes a 
negligent denial of claim for benefits will have the opportunity to 
hold that insurer accountable in State court. The patient will have 
access to the State courts that we have together supported for years. 
The patient will hold the insurer liable under the same State rules and 
procedures that a doctor will be held accountable under. Is not this 
what we have been fighting for all these years?
  My amendment includes those protections to prevent frivolous lawsuits 
that we have all fought to include in a bill. All of us. My amendment 
protects employers by allowing them to choose a designated decision-
maker, so very important to all of us.
  My amendment requires patients exhaust all administrative remedies. 
My amendment also includes a rebuttable presumption in favor of the 
plan if the reviewer rose in favor of the plan. While I know my friends 
have raised concerns about this provision, I continue to raise just one 
simple question: If an expert reviewer says an insurer was right in 
denying care, how was the insurer negligent in denying care? Should not 
they have some extra consideration?
  My amendment includes limitations on damages. There is a $1.5 million 
cap on noneconomic damages. There is a cap on punitive damages of $1.5 
million. That is only available when an insurer ignores an external 
reviewer. I believe personally in limitation of damages. Some of my 
colleagues do not, obviously. This is a legitimate area for debate, is 
it not?
  Mr. Chairman, these issues I have raised are issues we should be 
debating. I am sorry that the debate has deteriorated some. I am 
disappointed that they feel that they have not been given adequate time 
for a debate. I will understand if they feel they cannot support my 
amendment solely because of process, because they have heard me 
complain before of similar things.
  But before Members cast this vote against this bill, I ask them to 
consider what the amendment actually does; and more importantly, I want 
Members to support who supports this bill.
  The President has committed to signing our bill with this amendment. 
I have been working for 5 years to get a bill signed into law, not just 
pass another bill. Like it or not, we have to work with this President 
who has to sign this bill.
  I think my colleagues are deluding themselves, maybe, if they think 
we can force a bill down this President's throat. It is simply not 
going to happen with this honorable man from Texas. So I accept the 
President's offer to bridge the gap.
  I know this is not the final bill, and so do the Members. I know 
there are words that need to be changed. I think my colleagues are 
missing the boat by treating every interpretation of a problem in my 
amendment, real or imagined, as a life-or-death decision.
  Instead, we should be looking at the underlying offer and asking 
ourselves, is this an offer that accomplishes what we set out to do in 
creating a real remedy for patients?
  Mr. Chairman, the answer to that question is yes. I encourage my 
colleagues, all my colleagues, to join me in accepting the President's 
offer of a compromise to go into conference. I would encourage my 
colleagues who will vote no today to set aside their feelings and ask 
themselves, what are they holding out for? What is it that they need to 
say yes to, once and for all changing the law of this great Nation to 
protect patients?
  Mr. Chairman, I have found the answer, I believe. The working answer 
is in this amendment and in a conference. I would encourage my 
colleagues to join me in supporting this amendment. I am saddened 
deeply that it will not be bipartisan; and I know it will not, because 
I believe now and I have believed for years the true answer to this is 
a bipartisan solution.
  I want to take a minute of personal privilege to thank all the 
Members. Many Members on both sides of the aisle have worked as hard as 
I have. I know who they are. I have worked as hard against my friend, 
the gentleman from Kentucky (Mr. Fletcher), as anybody I know; but by 
golly, he has worked hard in his own way to protect patients, too.
  Nobody I know has been around this issue consistently and constantly 
and every time I turn around more than my friend, the gentleman from 
Arizona (Mr. Shadegg). He has added tremendously to this debate in many 
ways, which I do not have time to go over right now.
  I want to say to all of my Democratic colleagues, I believe them very 
much when they say they want a patient protections bill. I believe that 
our Members do, too. I know how hard they have worked. I know who they 
are, too. I have had a few hours with them to try to work this out.
  I just have to point out to all the Members, I want Members to know 
who Bridget Taylor is, a lady that I have the greatest respect and 
admiration for who has worked her little heart out for the benefit of 
patients of this Nation.
  I want to say to my staff, I thank them. I know what I have done to 
them. My friend, Rodney Whitlock, has been with me 7 years; and I do 
not know many people who have taken a worse beating on my behalf than 
Rodney Whitlock in the last 2 weeks. I thank him.
  And to my friend, the gentleman from Michigan (Mr. Dingell), he knows 
I love him and respect him, and I know where he wants to go. He knows 
where I want to go. It has been a great honor working with the 
gentleman from Michigan. I appreciate his efforts on behalf of 
patients, too.
  Lastly, I want to say to my friend, and I do mean that, to the 
gentleman from Iowa (Mr. Ganske), I do not know anybody, including me, 
that has worked as hard as the gentleman has. I admire the gentleman 
so. I know he is trying to do the right things for his patients. God 
knows, there is nobody more persistent and tough and stubborn and 
willing to fight and stand up, and I have admired the gentleman so, 
because he has taken some tough hits. I know the people of Iowa need to 
be grateful to have you as their Representative in Congress.
  Lastly, I want to say to all of the Members about the President of 
the United States, I do not make any bones about it, I love this man. I 
have gotten to know him. I have the greatest respect in the world for 
him. Whatever Members may think of him, I promise them, the President 
and his staff have worked me good for the last 2 weeks. What they have 
been trying to do is to get a patients' protection bill out that they 
can agree with.
  I thank them for their efforts and thank all of the Members. I hope 
that at some point tonight we will have a bipartisan vote.
  Mr. ANDREWS. Mr. Chairman, I yield myself the balance of my time.
  (Mr. ANDREWS asked and was given permission to revise and extend his 
remarks.)

[[Page H5274]]

  Mr. ANDREWS. Mr. Chairman, let me begin by expressing my appreciation 
to my good friend, the gentleman from Michigan (Mr. Dingell), whom I 
admire so much; to the gentleman from Iowa (Mr. Ganske); and to all 
those involved.
  The vote we are about to take is not about the good intentions of 
good and decent people, because there are many in this debate. It is 
about making a good choice for the people of our country, the people 
who are sitting in a hospital waiting-room tonight with their stomachs 
and their hearts in their throats, not just because they are worried 
about whether their loved one is going to recover, but whether they are 
going to have a hassle over who pays the bill. That is who we have to 
think about here tonight.
  I respect those who are here tonight to try to help the President. I 
am here to try to help the patients of the United States of America 
here tonight.
  To understand why I oppose this flawed amendment, Members need to 
understand the following situation. A person goes to her primary care 
provider. The primary care provider says, You really ought to see a 
specialist. She does not get the right to see the specialist because 
the HMO says no.
  Because of the time delay, she develops a malignant tumor. She is in 
the hospital. She dies as a result of the malignant tumor. But before 
she dies, the wrong medications are administered to her wrongly by an 
employee of the hospital. Her estate sues the hospital and sues the 
HMO, not because they want to recover a lot of money, but because they 
have been wronged.
  The way I read this bill, there is one word that denies that family's 
claim. Because despite whatever good intentions there might be, the law 
is about words, not good intentions. The words in this bill say that 
the actions of the HMO have to be the proximate cause of the injury.

                              {time}  2000

  And a good lawyer, and, boy, the HMOs have really good lawyers, is 
going to figure out in a heartbeat how to beat that case. Because he or 
she is going to say the death here was not ``the'' proximate cause by 
the HMO, it was ``a'' proximate cause. So the claim gets tossed out.
  This is not just about words, it is about values. If we want to hold 
the HMOs of this country accountable, this is the vote. There will not 
be another one. I do not think so. If my colleagues want to hold them 
accountable, they should come to floor, take out their card, and vote 
for the patients of this country. Vote ``no'' on the Norwood amendment.
  Mr. WEXLER. Mr. Chairman, I would like to state for the record my 
enthusiastic support for the Dingell-Ganske Bi-Partisan Patients' Bill 
of Rights (H.R. 2563) and my opposition to the Norwood amendment. The 
Dingell-Ganske is the only true patient protection bill in Congress. 
H.R. 2563 allows patients to sue an HMO in state courts when they are 
denied care. Further, the bill allows patients to sue in federal court 
for breach of contract.
  H.R. 2563 would return medical decision-making to patients and health 
care professionals. Americans would have greater access to specialists, 
including pediatric specialists for children and gynecologists for 
women. Coverage for emergency room care would be available, as well as 
the right to talk freely with doctors and nurses about every medical 
option. The Patients' Bill of Rights would end financial incentives for 
doctors and nurses to limit the care they provide. It would also 
provide an appeals process and real legal accountability for the 
decisions made by insurance companies.
  Opponents of this bill claim that the Dingell-Ganske Patients' Bill 
of Rights would unnecessarily expose employers to lawsuits. In fact, 
the newly filed Dingell-Ganske bill includes amendments adopted in the 
Senate which shield employers from liability if they are not directly 
involved in the decisionmaking process.
  In light of the passage of the McCain, Kennedy, Edwards Bipartisan 
Patients' Bill of Rights in the Senate, the Republican leadership has 
drafted a weak amendment that purports to protect patients' rights 
while at the same time protecting the insurance industry. At the last 
minute, the President, the Republican leadership and Congressman 
Norwood crafted an amendment that basically negates the Dingell-Ganske 
bill. While the Norwood Amendment claims to allow lawsuits to be filed 
in state courts, such suits would be limited by federal law. Further, 
the Norwood amendment allows employers to unilaterally remove an action 
from state to federal courts. Federal courts are the wrong venue for 
bringing medical suits. Federal courts are backlogged with cases that 
would take priority over civil actions. Further, federal courts do not 
have experience with medical suits because they are typically brought 
before state courts.
  Additionally, the Norwood amendment unreasonably caps non-economic 
damages. Those without substantial income--the elderly, children and 
homemakers would suffer the most under these limited damage provisions. 
The Amendment also caps punitive damages and heightens the bar required 
to obtain compensation by asking juries to meet the ``clear and 
convincing'' standard prior to awarding damages. In short, the 
Amendment creates legal hurdles that make it almost impossible for a 
patient who is being denied care to get help from the courts.
  All concerns over the Bipartisan Patient Protection bill have been 
resolved in the Senate and have been adopted in the newly drafted 
Dingell-Ganske. There is no reason to oppose this bill, unless you are 
trying to appease the insurance companies.
  Ms. MILLENDER-McDONALD. Mr. Chairman, I rise in support of the base 
bill, Dingell-Norwood-Ganske-Berry. However, I am concerned about 
provisions in the Norwood amendment, if adopted, that will have a 
deleterious impact on women.
  H.R. 2563, in its original form, provides protections for women and 
mothers and provides them with direct access to a physician 
specializing in obstetrics or gynecology, without them having to obtain 
prior authorization or referral from their primary physicians. The base 
bill requires that plans permit parents to designate a pediatrician as 
their child's primary provider. My district constituents will derive 
substantial benefits from this provision. Furthermore, the base bill 
provides vital protection regarding medical and surgical benefits for 
women afflicted with cancer, including coverage that a doctor deems 
medically necessary.
  Mr. Speaker, it is paramount for us to pass a bill that establishes 
both internal and external appeals processes, and which allows women a 
mechanism to appeal a denial of a benefit claim to services and/or 
treatment that a doctor feels is necessary. Today I stand and champion 
the needs of all Americans, but particularly for women. I applaud the 
authors of the Dingell-Ganske-Berry bill. Their legislation is a beacon 
of good policy and intentions. On the other hand, the negotiated 
agreement, crafted under the cloak of secrecy and darkness, must not be 
tolerated nor condoned. I implore my colleagues to support the base 
bill, support women's needs contained within it, and support Americans 
who want and need a true patients bill of rights.
  Ms. EDDIE BERNICE JOHNSON of Texas. Mr. Chairman, opponents of the 
Bipartisan Patients' Bill of Rights contend that allowing the public to 
sue their HMOs will lead to a litigation explosion, a rise in health 
care costs, and insurance companies going bankrupt. Regardless of the 
fact that none of these theories have been proven, and that the facts 
actually show the opposite to be true, they are inundating the public 
with this misleading rhetoric. Well, those who live in glass houses 
should not throw stones. The managed care industry does not hesitate to 
sue when it protects its bottom line, regardless of the effect it has 
on patients.
  Mr. Chairman, we must pass a Patients' Bill of Rights that no longer 
allows HMOs to maintain their privileged immunity from being held 
legally responsible to their patients. Though this is what we should 
do, many of my colleagues are willing to keep medical decisions in the 
hands of unqualified HMOs and support the Norwood amendment.
  The amendment provides for a one-sided preemption of state damage 
caps. For states with no damage caps, the damage caps in this amendment 
would apply. States that currently do not cap damages would be forced 
to accept the damage limitations provided in this bill. Mr. Chairman, a 
$500,000 cap to cover damages for pain and suffering is not enough. 
Placing a cap on punitive damages erodes the deterrent effect of 
punitive awards.
  Mr. Chairman, I would like to conclude with an example that may 
provide my colleagues with a clearer picture of what the Norwood 
amendment does to patients who depend on their insurance companies to 
provide for them.
  Consider the woman with breast cancer. Her HMO denies her a 
mammogram, which could have detected it. The undetected cancer worsens. 
When it is finally diagnosed, it is beyond treatment. The woman dies. 
Her family brings a lawsuit against the HMO for failure to provide the 
mammogram that could have identified her condition and led to life 
saving treatment. Even if the jury finds fault with the HMO, $500,000 
will not bring that woman back. $500,000 is not enough for pain and 
suffering. $500,000 is a slap on the wrist for an HMO that prevented a 
woman from receiving a mammogram that may have detected breast cancer, 
and possibly saved her life.
  Now, I ask my colleagues to imagine that this woman was their mother, 
their wife, their

[[Page H5275]]

daughter. Would $500,000 be enough to raise your kids? Would $500,000 
be enough to put your kids through college? Would $500,000 be enough to 
explain where their mother is? How then would they feel about the 
Norwood amendment--the amendment that stacks the deck against patients, 
the amendment that could possibly stack the deck against one of their 
loved ones?
  Mr. OWENS. Mr. Chairman, I rise in opposition to the Norwood 
amendment to H.R. 2563, the Bipartisan Patient Protection Act, aka, the 
Patients' Bill of Rights.
  The deception being debated here today is quite reminiscent of 
Orwell's novel when each day citizens wake up to a new reality. 
Yesterday, we left the Hill and Mr. Norwood was one of the leading 
proponents of a significant and fair Patient's Bill of Rights that was 
truly bipartisan. We arrived today and the Patients' Bill of Rights has 
been transformed into a HMO Bill of Rights, stripping both patients and 
states of the right to hold these ``sacred cows'' accountable. The 
extent to which the American people are being counted upon to ignore 
the details and simply ``don't worry, be happy'' that something was 
done is shameful and frightening.
  A system of checks and balances is only fair and just. Why should the 
patient and their family members be left without recourse in the event 
of a tragic error simply because they belong to an HMO. This is a 
government of, by, and for the people, not HMO's. Our responsibility is 
to ensure a patient's right to sue health plans for injuries sustained 
as a result of a delay or denial of medical care. If anyone deserves a 
privileged status when involved in or affected by medical decisions it 
should be the potential victim.
  A patient's right to recourse is an important check and balance in a 
system that must balance profit margins with patient needs. To take 
such an important protection away from American citizens is wrong. To 
further limit a state's right to protect its citizens from self serving 
decisions made by HMO's may be unconstitutional. To abandon our 
commitment to a meaningful Patient's Bill of Rights for political 
expedience is unconscionable. Mr. Norwood conceded too much. The 
Ganske/Dingell Bill offers us a chance to pass a true bipartisan 
Patient's Bill of Rights that is fair and just.
  Mr. Chairman, to preserve states' rights and consumer rights; and to 
block one more path toward the corporate takeover of America, I urge my 
colleagues to defeat this poison amendment, and pass a fair Patient's 
Bill of Rights.
   Mrs. CHRISTENSEN. Mr. Chairman, I rise in opposition to the Bush/
Norwood amendment and I urge my colleagues to oppose its passage.
  I agree with the American Medical Association, which oppose the 
Norwood amendment for four very good reasons.
   First, the Norwood amendment overturns the good work that states 
like Texas and Georgia have done in protecting patients. It reverses 
developing case law that allows patients to hold plans accountable when 
they make decisions that harm them.
  Second, the Norwood amendment takes away states power to set the 
standards by which HMOs can be punished with punitive damages creating 
a one-way preemption of states rights in favor HMOs.
  Third, it gives HMOs an unfair advantage by raising the bar making it 
harder for patients to make their case in court.
  Finally, and most troubling, the Norwood amendment provides patients 
protections on the one hand but does not allow them to enforce those 
same protections in court.
  Mr. Chairman, the Norwood amendment and all of the amendments offered 
today, are nothing more than poison pills designed to kill the 
meaningful Ganske/Dingell patient protection bill by forcing a 
conference with the Senate.
  I urge my colleagues to oppose the Norwood amendment, which is 
nothing more than a gift to the HMO industry. The American people want 
us to give them a real Patients' Bill of Rights with real enforcement 
provisions and real protections.
  Mr. McGOVERN. Mr. Chairman, I rise today to urge this House vote 
against the Norwood-Bush amendment for Ganske-Dingell.
  Norwood-Bush is not real reform. President Bush doesn't want to sign 
any meaningful patient protection legislation. As Governor, he never 
signed any Texas patient protection law, and now he is attempting to 
use this Congress to kill real patient protections.
  For five years, the Republicans ignored patients by forcing through 
hollow patient protection bills that only benefit insurance companies. 
Today we have an opportunity to finally put patients ahead of 
bureaucrats and bean-counters.
  President Bush wants the House to pass a bill just different enough 
that the Senate cannot support it. The House Republican leadership can 
then kill the bill in conference.
  Patients, their families and their physicians deserve much better.
  The Norwood-Bush proposal is about bad politics, not good policy.
  Let's get past the politics. Let's do this right.
  Pass the Ganske-Dingell bill.
  The CHAIRMAN. The question is on the amendment offered by the 
gentleman from Georgia (Mr. Norwood).
  The question was taken; and the Chairman announced that the ayes 
appeared to have it.


                             Recorded Vote

  Mr. ANDREWS. Mr. Chairman, I demand a recorded vote.
  A recorded vote was ordered.
  The vote was taken by electronic device, and there were--ayes 218, 
noes 213, not voting 3, as follows:

                             [Roll No. 329]

                               AYES--218

     Aderholt
     Akin
     Armey
     Bachus
     Baker
     Ballenger
     Barr
     Bartlett
     Barton
     Bass
     Bereuter
     Biggert
     Bilirakis
     Blunt
     Boehlert
     Boehner
     Bonilla
     Bono
     Brady (TX)
     Brown (SC)
     Bryant
     Burr
     Burton
     Buyer
     Callahan
     Calvert
     Camp
     Cannon
     Cantor
     Capito
     Castle
     Chabot
     Chambliss
     Coble
     Collins
     Combest
     Cooksey
     Cox
     Crane
     Crenshaw
     Cubin
     Culberson
     Cunningham
     Davis, Jo Ann
     Davis, Tom
     Deal
     DeLay
     DeMint
     Diaz-Balart
     Doolittle
     Dreier
     Duncan
     Dunn
     Ehlers
     Ehrlich
     Emerson
     English
     Everett
     Ferguson
     Flake
     Fletcher
     Foley
     Forbes
     Fossella
     Frelinghuysen
     Gallegly
     Gekas
     Gibbons
     Gilchrest
     Gillmor
     Gilman
     Goode
     Goodlatte
     Goss
     Graham
     Granger
     Graves
     Green (WI)
     Greenwood
     Grucci
     Gutknecht
     Hansen
     Hart
     Hastert
     Hastings (WA)
     Hayes
     Hayworth
     Hefley
     Herger
     Hilleary
     Hobson
     Hoekstra
     Horn
     Hostettler
     Houghton
     Hulshof
     Hunter
     Hutchinson
     Hyde
     Isakson
     Issa
     Istook
     Jenkins
     Johnson (CT)
     Johnson, Sam
     Jones (NC)
     Keller
     Kelly
     Kennedy (MN)
     Kerns
     King (NY)
     Kingston
     Kirk
     Knollenberg
     Kolbe
     LaHood
     Largent
     Latham
     LaTourette
     Lewis (CA)
     Lewis (KY)
     Linder
     LoBiondo
     Lucas (KY)
     Lucas (OK)
     Manzullo
     McCrery
     McHugh
     McInnis
     McKeon
     Mica
     Miller (FL)
     Miller, Gary
     Moran (KS)
     Myrick
     Nethercutt
     Ney
     Northup
     Norwood
     Nussle
     Osborne
     Ose
     Otter
     Oxley
     Pence
     Peterson (MN)
     Peterson (PA)
     Petri
     Pickering
     Pitts
     Platts
     Pombo
     Portman
     Pryce (OH)
     Putnam
     Quinn
     Radanovich
     Ramstad
     Regula
     Rehberg
     Reynolds
     Riley
     Rogers (KY)
     Rogers (MI)
     Rohrabacher
     Ros-Lehtinen
     Royce
     Ryan (WI)
     Ryun (KS)
     Saxton
     Scarborough
     Schaffer
     Schrock
     Sensenbrenner
     Sessions
     Shadegg
     Shaw
     Shays
     Sherwood
     Shimkus
     Shuster
     Simmons
     Simpson
     Skeen
     Smith (MI)
     Smith (TX)
     Souder
     Stearns
     Stump
     Sununu
     Sweeney
     Tancredo
     Tauzin
     Taylor (NC)
     Terry
     Thomas
     Thornberry
     Thune
     Tiahrt
     Tiberi
     Toomey
     Traficant
     Upton
     Vitter
     Walden
     Walsh
     Wamp
     Watkins (OK)
     Watts (OK)
     Weldon (FL)
     Weldon (PA)
     Weller
     Whitfield
     Wicker
     Wilson
     Wolf
     Young (AK)
     Young (FL)

                               NOES--213

     Abercrombie
     Ackerman
     Allen
     Andrews
     Baca
     Baird
     Baldacci
     Baldwin
     Barcia
     Barrett
     Becerra
     Bentsen
     Berkley
     Berman
     Berry
     Bishop
     Blagojevich
     Blumenauer
     Bonior
     Borski
     Boswell
     Boucher
     Boyd
     Brady (PA)
     Brown (FL)
     Brown (OH)
     Capps
     Capuano
     Cardin
     Carson (IN)
     Carson (OK)
     Clay
     Clayton
     Clement
     Clyburn
     Condit
     Conyers
     Costello
     Coyne
     Cramer
     Crowley
     Cummings
     Davis (CA)
     Davis (FL)
     Davis (IL)
     DeFazio
     DeGette
     Delahunt
     DeLauro
     Deutsch
     Dicks
     Dingell
     Doggett
     Dooley
     Doyle
     Edwards
     Engel
     Eshoo
     Etheridge
     Evans
     Farr
     Fattah
     Filner
     Ford
     Frank
     Frost
     Ganske
     Gephardt
     Gonzalez
     Gordon
     Green (TX)
     Gutierrez
     Hall (OH)
     Hall (TX)
     Harman
     Hastings (FL)
     Hill
     Hilliard
     Hinchey
     Hinojosa
     Hoeffel
     Holden
     Holt
     Honda
     Hooley
     Hoyer
     Inslee
     Israel
     Jackson (IL)
     Jackson-Lee (TX)
     Jefferson
     John
     Johnson (IL)
     Johnson, E. B.
     Jones (OH)
     Kanjorski
     Kaptur
     Kennedy (RI)
     Kildee
     Kilpatrick
     Kind (WI)
     Kleczka
     Kucinich
     LaFalce
     Lampson
     Langevin
     Lantos
     Larsen (WA)
     Larson (CT)
     Leach
     Lee
     Levin
     Lewis (GA)
     Lofgren
     Lowey
     Luther
     Maloney (CT)
     Maloney (NY)
     Markey
     Mascara
     Matheson
     Matsui
     McCarthy (MO)
     McCarthy (NY)
     McCollum
     McDermott
     McGovern
     McIntyre
     McKinney
     McNulty
     Meehan
     Meek (FL)
     Meeks (NY)
     Menendez
     Millender-McDonald
     Miller, George

[[Page H5276]]


     Mink
     Mollohan
     Moore
     Moran (VA)
     Morella
     Murtha
     Nadler
     Napolitano
     Neal
     Oberstar
     Obey
     Olver
     Ortiz
     Owens
     Pallone
     Pascrell
     Pastor
     Payne
     Pelosi
     Phelps
     Pomeroy
     Price (NC)
     Rahall
     Rangel
     Reyes
     Rivers
     Rodriguez
     Roemer
     Ross
     Rothman
     Roukema
     Roybal-Allard
     Rush
     Sabo
     Sanchez
     Sanders
     Sandlin
     Sawyer
     Schakowsky
     Schiff
     Scott
     Serrano
     Sherman
     Shows
     Skelton
     Slaughter
     Smith (NJ)
     Smith (WA)
     Snyder
     Solis
     Spratt
     Stark
     Stenholm
     Strickland
     Stupak
     Tanner
     Tauscher
     Taylor (MS)
     Thompson (CA)
     Thompson (MS)
     Thurman
     Tierney
     Towns
     Turner
     Udall (CO)
     Udall (NM)
     Velazquez
     Visclosky
     Waters
     Watson (CA)
     Watt (NC)
     Waxman
     Weiner
     Wexler
     Woolsey
     Wu
     Wynn

                             NOT VOTING--3

     Lipinski
     Paul
     Spence

                              {time}  2023

  Mr. ISTOOK changed his vote from ``no'' to ``aye.''
  So the amendment was agreed to.
  The result of the vote was announced as above recorded.
  The CHAIRMAN. It is now in order to consider Amendment No. 3 printed 
in House Report 107-184.


                 Amendment No. 3 Offered by Mr. Thomas

  Mr. THOMAS. Mr. Chairman, I offer an amendment.
  The CHAIRMAN. The Clerk will designate the amendment.
  The text of the amendment is as follows:

       Amendment No. 3 offered by Mr. Thomas:
       Add at the end the following new title (and amend the table 
     of contents of the bill accordingly):

      TITLE VIII--REFORMS RELATING TO HEALTH CARE LIABILITY CLAIMS

     SEC. 801. TABLE OF CONTENTS OF TITLE.

       The table of contents of this title is as follows:

       Sec. 801. Table of contents of title.
       Sec. 802. Application in States.
       Sec. 803. Encouraging speedy resolution of claims.
       Sec. 804. Compensating patient injury; fair share rule.
       Sec. 805. Authorization of payment of future damages to 
           claimants in health care lawsuits.
       Sec. 806. No punitive damages for health care products that 
           comply with FDA standards.
       Sec. 807. Effect on other laws.
       Sec. 808. Definitions.
       Sec. 809. Effective date; general provisions.

     SEC. 802. APPLICATION IN STATES.

       The provisions of this title relating to any requirement or 
     rule shall not apply with respect to a health care lawsuit 
     brought under State law insofar as the applicable statutory 
     law of that State with respect to such lawsuit specifies 
     another policy with respect to such requirement or rule.

     SEC. 803. ENCOURAGING SPEEDY RESOLUTION OF CLAIMS.

       Health care lawsuits shall be commenced no later than 2 
     years after the claimant discovers, or through the use of 
     reasonable diligence should have discovered, the injury for 
     which the lawsuit was brought. In all cases, a health care 
     lawsuit shall be filed no later than 5 years after the date 
     of the injury. The time periods for filing health care 
     lawsuits established in this section shall not apply in cases 
     of malicious intent to injure. To the extent that chapter 171 
     of title 28, United States Code, relating to tort procedure, 
     and, subject to section 802, State law (with respect to both 
     procedural and substantive matters), establishes a longer 
     period during which a health care lawsuit may be initiated 
     than is authorized in this section, such chapter or law is 
     superceded or preempted.

     SEC. 804. COMPENSATING PATIENT INJURY; FAIR SHARE RULE.

       (a) Unlimited Amount of Damages for Actual Losses in Health 
     Care Lawsuits.--In any health care lawsuit, the full amount 
     of a claimant's economic loss may be fully recovered, subject 
     to section 809(d)(2), without limitation.
       (b) Additional Non-Economic Damages.--Subject to section 
     809(d)(2), in any health care lawsuit, the amount of non-
     economic damages may be as much as $250,000, regardless of 
     the number of parties against whom the action is brought or 
     the number of separate claims or actions brought with respect 
     to the same occurrence.
       (c) No Discount of Award for Non-Economic Damages.--In any 
     health care lawsuit, an award for future non-economic damages 
     shall not be discounted to present value. The jury shall not 
     be informed of the maximum award for non-economic damages. An 
     award for non-economic damages in excess of the amount 
     specified in subsection (b) (or the amount provided under 
     section 809(d)(2), if applicable) shall be reduced either 
     before the entry of judgment, or by amendment of the judgment 
     after entry, and such reduction shall be made before 
     accounting for any other reduction in damages required by 
     law. If separate awards are rendered for past and future non-
     economic damages and the combined awards exceed the amount so 
     specified, the future non-economic damages shall be reduced 
     first.
       (d) Fair Share Rule.--In any health care lawsuit, each 
     party shall be liable for the party's several share of any 
     damages only and not for the share of any other person. Each 
     party shall be liable only for the amount of damages 
     allocated to such party in direct proportion to such party's 
     percentage of responsibility. A separate judgment shall be 
     rendered against each such party for the amount allocated to 
     such party. For purposes of this section, the trier of fact 
     shall determine the proportion of responsibility of each 
     party for the claimant's harm.
       (e) Additional Health Benefits.--In any health care 
     lawsuit, any party may introduce evidence of collateral 
     source benefits. If any party elects to introduce such 
     evidence, the opposing party may introduce evidence of any 
     amount paid or contributed or reasonably likely to be paid or 
     contributed in the future by or on behalf of such opposing 
     party to secure the right to such collateral source benefits. 
     No provider of collateral source benefits shall recover any 
     amount against the claimant or receive any lien or credit 
     against the claimant's recovery or be equitably or legally 
     subrogated to the right of the claimant in a health care 
     lawsuit. This subsection shall apply to a health care lawsuit 
     that is settled as well as a health care lawsuit that is 
     resolved by a fact finder.
       (f) Treatment of Punitive Damages.--
       (1) General rule.--Punitive damages may, to the extent 
     permitted by applicable State law, be awarded in any health 
     care lawsuit in any Federal or State court against a 
     defendant if the claimant establishes by clear and convincing 
     evidence that the harm suffered was the result of conduct--
       (A) specifically intended to cause harm; or
       (B) conduct manifesting a conscious, flagrant indifference 
     to the rights or safety of others.
       (2) Applicability.--This subsection shall apply to any such 
     health care lawsuit on any theory where punitive damages are 
     sought. This subsection does not create a cause of action for 
     punitive damages.
       (3) Limitation on punitive damages.--The total amount of 
     punitive damages that may be awarded to a claimant for losses 
     resulting from the injury which is the subject of such a 
     health care lawsuit may not exceed the greater of--
       (A) 2 times the amount of economic damages, or
       (B) $250,000,

     regardless of the number of parties against whom the action 
     is brought or the number of actions brought with respect to 
     the injury. Subject to section 802, this subsection does not 
     preempt or supersede any State or Federal law to the extent 
     that such law would further limit the award of punitive 
     damages.
       (4) Bifurcation.--At the request of any party, the trier of 
     fact shall consider in a separate proceeding whether punitive 
     damages are to be awarded and the amount of such award. If a 
     separate proceeding is requested, evidence relevant only to 
     the claim of punitive damages, as determined by applicable 
     State law, shall be inadmissible in any proceeding to 
     determine whether actual damages are to be awarded.
       (g) Limitations on Applicability of this Section.--This 
     section applies only to health care lawsuits. Furthermore 
     only to the extent that--
       (1) chapter 171 of title 28, United States Code, relating 
     to tort procedure, permits the recovery of a greater amount 
     of damages than authorized by this section, such chapter 
     shall be superseded by this section; and
       (2) only to the extent that either chapter 171 of title 28, 
     United States Code, relating to tort procedure, or, subject 
     to section 802, State law (with respect to procedural and 
     substantive matters), prohibits the introduction of evidence 
     regarding collateral source benefits or mandates or permits 
     subrogation or a lien on an award of damages for the cost of 
     providing collateral source benefits, such chapter or law is 
     superseded or preempted by this section.

     SEC. 805. AUTHORIZATION OF PAYMENT OF FUTURE DAMAGES TO 
                   CLAIMANTS IN HEALTH CARE LAWSUITS.

       (a) In General.--In any health care lawsuit, if an award of 
     future damages, without reduction to present value, equaling 
     or exceeding $50,000 is made against a party with sufficient 
     insurance or other assets to fund a period payment of such a 
     judgment, the court shall, at the request of any party, enter 
     a judgment ordering that the future damages be paid by 
     periodic payments in accordance with the Uniform Periodic 
     Payment of Judgments Act promulgated by the National 
     Conference of Commissioners on Uniform State Laws in July 
     1990. This section applies to all actions which have not been 
     first set for trial or retrial prior to the effective date of 
     this title.
       (b) Limitation on Applicability of This Section.--Only to 
     the extent that chapter 171 of title 28, United States Code, 
     relating to tort procedure, or, subject to section 802, State 
     law (with respect to both procedural and substantive 
     matters), reduces the applicability or scope of the 
     regulation of periodic payment of future damages as 
     authorized in this section, is such chapter or law preempted 
     or superseded.

[[Page H5277]]

     SEC. 806. NO PUNITIVE DAMAGES FOR HEALTH CARE PRODUCTS THAT 
                   COMPLY WITH FDA STANDARDS.

       (a) General Rule.--In the case of any health care lawsuit, 
     no punitive or exemplary damages may be awarded against the 
     manufacturer of a medical product based on a claim that the 
     medical product caused the claimant's harm if the medical 
     product complies with FDA standards.
       (b) Exception.--Subsection (a) shall not apply in any 
     health care lawsuit in which--
       (1) before or after the grant of FDA permission to market a 
     medical product, a person knowingly misrepresents to or 
     withholds from the FDA required information that is material 
     and relevant to the performance of such medical product, if 
     such misrepresentation or withholding of information is 
     causally related to the harm which the claimant allegedly 
     suffered; or
       (2) a person makes an illegal payment to an official of FDA 
     for the purpose of either securing or maintaining approval of 
     such medical product.

     SEC. 807. EFFECT ON OTHER LAWS.

       This title does not affect the application of title XXI of 
     the Public Health Service Act (relating to the national 
     vaccine program). To the extent that this title is judged to 
     be in conflict with such title XXI, then this title shall not 
     apply to an action brought under such title. If any aspect of 
     such a civil action is not governed by a Federal rule of law 
     under such title, then this title or otherwise applicable law 
     (as determined under this title) will apply to that aspect of 
     the action.

     SEC. 808. DEFINITIONS.

       As used in this title:
       (1) Alternative dispute resolution.--The term ``alternative 
     dispute resolution'' means a system that provides for the 
     resolution of health care lawsuits in a manner other than 
     through a civil action brought in a State or Federal Court.
       (2) Amount recovered by claimants.--The term ``amount 
     recovered by claimants'' means the total amount of damages 
     awarded to a party, after taking into account any reduction 
     in damages required by this title or applicable law, and 
     after deducting any disbursements or costs incurred in 
     connection with prosecution or settlement of a claim, 
     including all costs paid or advanced by any person. Costs of 
     health care incurred by the plaintiff and the attorneys' 
     office overhead costs or charges for legal services are not 
     deductible disbursements or costs for such purpose. Such term 
     does not include any punitive or exemplary damages.
       (3) Claimant.--The term ``claimant'' means any person who 
     asserts a health care liability claim or brings a health care 
     lawsuit, including a person who asserts or claims a right to 
     legal or equitable contribution, indemnity, or subrogation, 
     arising out of a health care lawsuit, and any person on whose 
     behalf such a claim is asserted or such an action is brought, 
     whether deceased, incompetent, or a minor.
       (4) Collateral source benefits.--The term ``collateral 
     source benefits'' means any amount paid or reasonably likely 
     to be paid in the future to or on behalf of the claimant, or 
     any service, product or other benefit provided or reasonably 
     likely to be provided in the future to or on behalf of the 
     claimant, as a result of injury or wrongful death, pursuant 
     to--
       (A) any State or Federal health, sickness, income-
     disability, accident or workers' compensation act;
       (B) any health, sickness, income-disability, or accident 
     insurance that provides health benefits or income-disability 
     coverage;
       (C) any contract or agreement of any group, organization, 
     partnership, or corporation to provide, pay for, or reimburse 
     the cost of medical, hospital, dental, or income disability 
     benefits; and
       (D) any other publicly or privately funded program.
       (5) Complies With FDA standards.--The term ``complies with 
     FDA standards'' means, in the case of any medical product, 
     that such product is either--
       (A) subject to pre-market approval or review by the Food 
     and Drug Administration under section 505, 506, 510, 515 or 
     520 of the Federal Food, Drug, and Cosmetic Act (21 U.S. C. 
     355, 356, 360, 360e, 360j) or section 351 of the Public 
     Health Service Act (42 U.S. C. 262) and such approval or 
     review concerns the adequacy of the packaging or labeling of 
     such medical product or the safety of the formulation or 
     performance of any aspect of such medical product which a 
     health care lawsuit claims caused the claimant's harm, and 
     such medical product was marketed in conformity with the 
     regulations under such sections, or
       (B) generally recognized as safe and effective pursuant to 
     conditions established by the FDA and applicable FDA 
     regulations, including those related to packaging and 
     labeling.
       (6) Contingent fee.--The term ``contingent fee'' includes 
     all compensation to any person or persons which is payable 
     only if a recovery is effected on behalf of one or more 
     claimants.
       (7) Economic loss.--The term ``economic loss'' means 
     reasonable amounts incurred for necessary health treatment 
     and medical expenses, lost wages, replacement service losses, 
     and other pecuniary expenditures due to personal injuries 
     suffered as a result of injury.
       (8) FDA.--The term ``FDA'' means the Food and Drug 
     Administration.
       (9) Health care goods or services.--The term ``health care 
     goods or services'' means any medical product, or any service 
     provided by a health care provider or by any individual 
     working under the supervision of a health care provider, that 
     relates to the diagnosis, prevention, or treatment of any 
     human disease or impairment, or the assessment of the health 
     of human beings.
       (10) Health care lawsuit.--The term ``health care lawsuit'' 
     means any health care liability claim concerning the 
     provision of health care goods or services, or any civil 
     action concerning the provision of health care goods or 
     services brought in a State or Federal Court or pursuant to 
     an alternative dispute resolution procedure, against a health 
     care provider or the manufacturer, distributor, supplier, 
     marketer, promoter or seller of a medical product, regardless 
     of the theory of liability on which the claim is based, or 
     the number of claimants, plaintiffs, defendants, or other 
     parties, or the number of claims or causes of action in which 
     the claimant alleges a health care liability claim.
       (11) Health care liability claim.--The term ``health care 
     liability claim'' means a demand by any person (whether or 
     not pursuant to an alternative dispute resolution system, an 
     action in State court, or an action in Federal court) 
     concerning the provision of health care goods or services, if 
     made against a health care provider or the manufacturer, 
     distributor, supplier, marketer, promoter or seller of a 
     medical product, including third-party claims, cross-claims, 
     counter-claims, or contribution claims, which are based upon 
     the provision or use of (or the failure to provide or use) 
     health care services or medical products, regardless of the 
     theory of liability on which the claim is based, or the 
     number of claimants, plaintiffs, defendants, or other 
     parties, or the number of claims or causes of action.
       (12) Health care provider.--The term ``health care 
     provider'' means any person or entity required by State or 
     Federal laws or regulations to be licensed, registered, or 
     certified to provide health care goods or services or whose 
     health care goods or services are required to be so licensed, 
     registered, or certified, or which are exempted from such 
     requirement by other statute or regulation.
       (13) Injury.--The term ``injury'' means any illness, 
     disease, or other harm that is the subject of a health care 
     liability claim.
       (14) Malicious intent to injure.--The term ``malicious 
     intent to injure'' means intentionally causing or attempting 
     to cause physical injury other than providing health care 
     goods or services.
       (15) Medical product.--The term ``medical product'' means a 
     drug (as defined in section 201(g)(1) of the Federal Food, 
     Drug and Cosmetic Act (21 U.S.C. 321(g)(1)) or a medical 
     device as defined in section 201(h) of such Act (21 U.S.C. 
     321(h)), including anycomponent or raw material used therein, 
     but excluding health care services.
       (16) Non-economic loss.--The term ``non-economic loss'' 
     means physical impairment, emotional distress, mental 
     anguish, disfigurement, loss of enjoyment, loss of 
     companionship, loss of services, loss of consortium, and any 
     other non-pecuniary losses.
       (17) Recovery.--The term ``recovery'' means the net sum 
     recovered after deducting any disbursements or costs incurred 
     in connection with prosecution or settlement of a claim, 
     including all costs paid or advanced by any person. Costs of 
     health care incurred by the plaintiff and the attorneys' 
     office overhead costs or charges for legal services are not 
     deductible disbursements or costs for such purpose.
       (18) State.--The term ``State'' means each of the several 
     States, the District of Columbia, the Commonwealth of Puerto 
     Rico, the Virgin Islands, Guam, American Samoa, the Northern 
     Mariana Islands, the Trust Territory of the Pacific Islands, 
     and any other territory or possession of the United States, 
     or any political subdivision thereof.
       (20) State law.--The term ``State law'' includes all 
     constitutional provisions, statutes, laws, judicial 
     decisions, rules, regulations, or other State action having 
     the effect of law in any State.

     SEC. 809. EFFECTIVE DATE; GENERAL PROVISIONS.

       (a) In General.--This title shall apply to any health care 
     lawsuit brought in a Federal or State court, and to any 
     health care liability claim subject to an alternative dispute 
     resolution system, that is initiated on or after the date of 
     enactment of this Act, except that any health care lawsuit 
     arising from an injury occurring before the date of enactment 
     of this Act shall be governed by the applicable statute of 
     limitations provisions in effect at the time the injury 
     occurred.
       (b) Health Care Lawsuits.--The provisions governing health 
     care lawsuits set forth in this title supersede chapter 171 
     of title 28, United States Code, relating to tort claims 
     procedure and, subject to section 802, preempt State law to 
     the extent that State law differs from any provisions of law 
     established by or under this title.
       (c) Protection of States' Rights.--Any issue that is not 
     governed by any provision of law established by or under this 
     title (including State standards of negligence) will be 
     governed by otherwise applicable State or Federal law. 
     Subject to subsection (d)(2) and section 802, this title does 
     not preempt or supersede any law that imposes greater 
     protections for health care providers, plans, and 
     organizations from liability, loss, or damages that those 
     provided by this title.
       (d) Rule of Construction.--No provision of this title shall 
     be construed to preempt--

[[Page H5278]]

       (1) the implementation of any State sponsored or private 
     alternative dispute resolution program;
       (2) pursuant to section 802, any State statutory limit 
     (whether enacted before, on, or after the date of the 
     enactment of this Act) on the total amount of economic, non-
     economic, or punitive damages that may be awarded in a health 
     care lawsuit, whether or not such State statutory limit 
     permits the recovery of a greater or lesser amount of such 
     damages than is provided for under section 804; or
       (3) any defense available to a party in a health care 
     lawsuit under any other provision of Federal law.

  The CHAIRMAN. Pursuant to House Resolution 219, the gentleman from 
California (Mr. Thomas) and the gentleman from Michigan (Mr. Conyers) 
each will control 20 minutes.
  The Chair recognizes the gentleman from California (Mr. Thomas.)
  Mr. THOMAS. Mr. Chairman, I yield myself 3 minutes. Subsequent to 
that I yield the balance of my time to the gentleman from California 
(Mr. Cox) and ask unanimous consent that he control the balance of the 
time.
  The CHAIRMAN. Without objection, the gentleman from California (Mr. 
Cox) will control the balance of the time.
  There was no objection.
  (Mr. THOMAS asked and was given permission to revise and extend his 
remarks.)
  Mr. THOMAS. Mr. Chairman, the amendment that was just passed puts a 
limit on the amount that can be received in terms of damages. One side 
of the equation has been adjusted properly. Notwithstanding the fact 
you can seek damages, there is a limit.
  This amendment proposes to create balance, put a limit on the other 
side of the equation. What you see here is a quote from a letter from 
the American College of Surgeons to the President of the United States 
on February 7. It says:
  If the Congress seriously entertains caps on punitive and noneconomic 
damages--we have just done that--we believe it would be difficult if 
not impossible to explain why Federal policymakers did not at the same 
time address the liability exposure faced by physicians, hospitals and 
other health care practitioners.
  It would be unfair, the College of Surgeons said, to enact a 
patients' bill of rights that caps damages for suits against health 
plans without capping damages for suits brought against physicians and 
other health care providers. This is exactly what this amendment does. 
It does not intrude on any State that has in place its own desired 
medical malpractice structure, but where there is none, this amendment 
will provide one unless and until the State passes its own and the 
State's prerogative would then prevail. It is simply an opportunity to 
provide a degree of uniformity where there is none today.
  Mr. Chairman, it is my pleasure to include for the Record a letter, I 
might say a long overdue letter, from the American Medical Association.
  It says, and I quote, on behalf of the American Medical Association, 
we would like to express our support for medical liability reform 
consistent with the general tort reform provisions included in the 
amendment to H.R. 2563 being offered by the gentleman from California 
(Mr. Cox), myself, Chairman Tauzin, Chairman Boehner and Chairman 
Sensenbrenner.
  The American Medical Association has gone on record in support of 
this medical malpractice amendment. Let us bring symmetry to this 
package. Let us put limits on plans. Let us put limits on physicians. 
Let us move forward in a way in which, as we go to conference, we will 
know for sure that at long last there is balance in the way in which 
assessment and the metering out is done where patients' health is 
concerned.

                                 American Medical Association,

                                Chicago, Illinois, August 2, 2001.
     Hon. Chris Cox,
     U.S. House of Representatives,
     Washington, DC.
       Dear Representative Cox: On behalf of the American Medical 
     Association (AMA) we would like to express our support for 
     medical liability reform consistent with the general tort 
     reform provisions included in the amendment to H.R. 2563 
     being offered by you and Representatives Bill Thomas, Billy 
     Tauzin, John Boehner, and Jim Sensenbrenner.
       AMA policy has long supported medical liability reform and 
     we appreciate your efforts in this regard. As you know we 
     have expressed concerns in the past about coupling such 
     reforms with the Patients' Bill of Rights. As we enter 
     conference it continues to be our hope that controversy 
     surrounding this amendment will not interfere with the 
     ultimate passage of meaningful patients' rights legislation.
       This issue remains a high priority for the AMA and we stand 
     ready to work with you on this or any other matter.
           Respectfully,
                                             Robert W. Gilmore, MD

  Mr. CONYERS. Mr. Chairman, I yield myself such time as I may consume.
  Ladies and gentlemen of the House, we are now reaching perhaps the 
worst amendment on medical malpractice that has ever been brought 
forward to the House of Representatives. I say that carefully because 
the one that the Republicans brought forward in 1995 was a real doozy, 
but this one goes further than that one. This caps doctors and 
hospitals. What makes it worse than 1995 is that it extends medical 
malpractice protection to insurance and HMO companies.
  Secondly, it lowers punitive damage caps to only two times the 
economic damages, or $250,000, where the 1995 bill in its generosity 
limited it to three times economic damages, or $250,000.
  Third, it has new limitations on accruing interest on noneconomic 
damages.
  Finally, it applies limitations to private settlements as well as 
court cases.
  So here in a system where each State has heretofore determined what 
the economic damages would be, what the noneconomic damages would be, 
what the punitive damages would be, here the majority party in this 
body has now determined that we are not only going to protect HMOs, we 
are going to cap suits against doctors and hospitals.
  In a single stroke, the Thomas amendment, which is joined in by 
several chairmen on the other side as well, would place an arbitrary 
and capricious cap on the ability of the millions of persons harmed by 
medical negligence to recover in their own State courts. This amendment 
is even worse than the coverage in the Norwood amendment; and as I have 
said, this is the most severe and limiting malpractice amendment ever 
considered by the House.
  If it were adopted, Congress would be saying to the American people, 
We don't care if you lose your ability to bear children; we don't care 
if you're forced to bear excruciating pain for the remainder of your 
life; we don't care if you're permanently disfigured or crippled, 
because under this amendment, a medical professional who fell asleep in 
the operating room or operated on the wrong patient would be completely 
insulated from punitive damages. The language goes so far as to cap the 
liability of a doctor, heaven forbid, who even rapes his patient. Do 
Members not know that punitive damages are the only way to deter such 
outrageous conduct?
  The new statute of limitations takes no account of the fact that many 
injuries caused by malpractice or faulty drugs take years, sometimes 
decades, to manifest themselves. Under this proposal, a patient who is 
negligently inflicted with HIV-infected blood and develops AIDS 6 years 
later would be forever barred from filing a liability claim.
  The so-called periodic payment provisions are nothing less than a 
Federal installment plan for HMOs. The bill allows insurance companies 
teetering on the verge of bankruptcy to delay and then completely avoid 
future financial obligations. Have you no shame? They would have no 
obligation to pay interest on amounts they owe their victims.
  And guess what else happens under this sweetheart deal of an 
amendment? The drug companies, the producers of killer devices like the 
Dalkon Shield, the Cooper-7 IUD, high absorbency tampons linked to 
toxic shock syndrome and silicone gel implants, all would have 
completely avoided billions of dollars in damages had this bill been 
law.
  Somewhere between 80 to 100,000 people die in this country each year 
from medical malpractice. It is the third leading cause of preventable 
deaths in America. If we pass this amendment, there is no question that 
the pain and suffering and deaths will increase. And this Congress will 
be to blame.
  Therefore, I urge a ``no'' vote on the Thomas amendment.
  Mr. Chairman, this ``poison pill'' amendment represents the most far 
reaching and dangerous malpractice provision ever considered by the 
Congress, and is even worse than previous malpractice limitations 
passed during the

[[Page H5279]]

``Contract with America.'' Unlike previous malpractice amendments taken 
up the Republican House, this would apply to limit HMO and insurance 
company liability. It would also supersede state laws to severely limit 
recoveries by harmed patients. The following is a more detailed 
description.
  Scope and Preemption (Secs. 802,809)--the amendment preempts state 
law and the federal torts claims act with regard to any health care 
actions, even privately negotiated claims and those submitted to 
arbitration. This means the bill would limit the liability of 
physicians, drug companies, and hospitals. In addition, it would limit 
the liability of HMO's and insurance companies in a far more severe 
fashion that the Norwood amendment or the Fletcher bill.
  Statute of limitations/repose (Sec. 803)--provides for a statute of 
limitations that prohibits victims from bringing any health care 
lawsuit more than two years after an injury is discovered. It also 
provides for a statute of repose that prohibits victims from bringing 
any health care lawsuit more than five years after the negligent 
conduct that caused the injury first occurred. The above time 
limitations for initiating a health care lawsuit will not apply in 
cases where there is a ``malicious'' intent to injure--an almost 
impossible standard to meet. Thus under the proposal, a patient who is 
negligently inflicted with HIV-inflected blood and develops AIDS 6 
years later would be forever barred from filing a medical malpractice 
or product liability claim.
  Cap on Non-economic Damages (Sec. 804(b), (c))--caps the award of 
non-economic damages in health care lawsuits at $250,000 regardless of 
the number of defendants involved. These caps are far more restrictive 
than the caps on non-economic damages proposed in the Norwood amendment 
of $1.5 million. Although harder to scientifically measure, non-
economic damages compensate victims for real losses--such as loss of 
sight, disfigurement, inability to bear children, incontinence, 
inability to feed or bathe oneself, or loss of a limb--that are not 
accounted for in lost wages. Caps on non-economic damages would 
unfairly penalize those victims who suffer the most severe injury and 
are most in need of financial security. Non-economic damage caps have 
also been found to have a disproportionately negative impact on women, 
minorities, the poor, the young, and the unemployed; since they 
generally have lower wages, a greater proportion of their losses is 
non-economic. The bill also provides that an award for future non-
economic damages will not be discounted to present value, which would 
appear to mean that there will be no adjustment made for inflation when 
non-economic damages are awarded. This restriction has never been 
proposed in any previous malpractice amendment.
  Joint and Several Liability (804)(d))--provides that in any health 
care lawsuit concerning the provision of health care goods or services, 
each party shall be liable only for the amount of damages allocated to 
such party in direct proportion to such party's percentage of 
responsibility. This provision eliminates the state doctrine of joint 
and several liability for non-economic damages, and raises the concern 
that instead of placing the burden of financial loss on 
the identifiable defendant, victims who prevail on a liability claim 
may not be able to recover all of their damages.

  Collateral Source (804(e))--eliminates the collateral source rule by 
allowing defendants in medical malpractice cases to unilaterally 
introduce evidence of collateral source payments received or to be 
received by the claimant, such as health or disability insurance. In 
most states under the collateral source rule, a victim is able to 
obtain compensation for the full amount of damages incurred, and his or 
her health insurance provider is able to seek subrogation in respect of 
its own payments to the victim. This ensures that the true cost of 
damages lies with the wrongdoer while eliminating the possibility of 
double recovery by the victim. The Thomas amendment would turn this 
system on its head by allowing tortfeasors to introduce evidence of 
potential collateral payments owing from the insurer to the victim. 
This would have the effect of shifting costs from negligent health care 
providers at the expense of injured victims.
  Limits on Punitive Damages (804(f))--caps punitive damage awards at 
the greater of $250,000 or two times economic damages and limits the 
state law standard for the award of punitive damages to intentional or 
``consciously indifferent'' conduct; and allows for a bifurcated 
proceeding to determine issues relating to punitive damages. Again, the 
cap on punitive damages in the Thomas amendment is far worse than even 
the Norwood amendment which caps punitive damages at $1.5 million. It 
is also more severe than previously considered malpractice amendments. 
Punitive damages impose punishment for outrageous and deliberate 
misconduct and they deter others from engaging in similar behavior. 
Collectively, these restrictions on punitive damages are likely to 
completely eliminate not only the incentive for seeking punitive 
damages, but any realistic possibility of obtaining them. Permitting 
defendants to bifurcate proceedings concerning the award of punitive 
damages will lead to far more costly and time-consuming proceedings, 
again working to the disadvantage of injured victims.
  Periodic Payments (805)--grants wrongdoers the option of paying 
damage awards in excess of $50,000 on an ``installment plan.'' This 
provision would apply not only to future economic damages realized over 
time, such as lost wages, but to non-economic losses, like the loss of 
a limb, that are realized all at once. Also, in contrast to many state 
law periodic payment provisions, the Thomas proposal does not seek to 
protect the victim from the risk of nonpayment resulting from future 
insolvency by the wrongdoer or to specify that future payments should 
be increased to account for inflation or to reflect changed 
circumstances.
  Elimination of Punitive Damages for FDA approved health care 
products--completely bans punitive damages in the case of drugs or 
other devices that have been approved by the FDA or any other drug 
``generally recognized as safe and effective'' pursuant to FDA-
established conditions. Injuries from medical devices have an estimated 
cost of $26 billion annually. It is problematic to use compliance with 
the FDA as a basis for immunity from punitive damages when those 
regulations have proven inadequate to protect patients numerous times 
in the past. Government safety standards, at their best, establish only 
a minimum level of protection for the public. At their worst, they can 
become outdated, under-protective or under-enforced. Providing immunity 
from punitive damages to these manufacturers would eliminate the 
possibility of recovering these costs and would shift the burden to the 
injured patient. Banning punitive damages for FDA-approved products 
will also have a disproportionate impact on women and seniors, since 
they make up the largest class of victims of medical products.
  The Thomas amendment also ignores a number of complex legal issues. 
For example, in the state law context, various damage caps have been 
held to violate state constitutional guarantees relating to equal 
protection, due process, and rights of trial by jury and access to the 
courts; and these very same concerns will surely be present at the 
Federal level. And by layering a system of Federal rules on top of a 
two-century old system of State common law, the Thomas amendment will 
inevitably lead to confusing conflicts, not only within the Federal and 
State courts, but between Federal and State courts.
  Mr. Chairman, I reserve the balance of my time.
  Mr. COX. Mr. Chairman, I yield such time as he may consume to the 
gentleman from Florida (Mr. Shaw).
  (Mr. SHAW asked and was given permission to revise and extend his 
remarks.)
  Mr. SHAW. Mr. Chairman, I rise in strong support of the Patients' 
Bill of Rights and this amendment to reform malpractice.
  Mr. Chairman, in the last Congress I cosponsored the Bipartisan 
Consensus Managed Care Improvement Act, known as the Dingell-Norwood 
bill, after much serious consideration. I decided to support this 
reform legislation, in opposition to Republican leadership, in order to 
send a strong message to patients and the managed care industry about 
the importance of addressing managed care abuses. Notwithstanding my 
support for the Dingell-Norwood bill in 1999, I remained concerned that 
implementation of that bill could increase health insurance costs and 
expand liability to employers and health plans, and therefore voted for 
several less litigious substitutes last year. As a result, this year I 
am cosponsor of H.R. 2315, Patients' Bill of Rights Act of 2001, which 
was introduced by Representative Ernie Fletcher and endorsed by 
President George W. Bush.
  Because of my concern that the new Ganske-Dingell bill could result 
in a tidal wave of medical malpractice lawsuits against health plans, 
HMOs--and, make no mistake about it--doctors, hospitals and other 
health care providers, I rise in strong support of the Thomas-Cox 
Medical Malpractice Reform Amendment.
  Currently, even before the drastic expansion of medical malpractice 
lawsuits that would certainly result from passage of the new Ganske-
Dingell bill, it was estimated that the direct and indirect costs of 
medical malpractice reform cost the Medicare program approximately $1.5 
billion over a 10 year period. Why? Because the threat of lawsuits 
results in physicians practicing defensive medicine--for example, 
ordering extra tests or treatments that they might not otherwise do. 
This adds indirectly to Medicare costs at a time when the Medicare 
program, like the Social Security program, will be running a deficit in 
the near future as millions of baby boomers become eligible for 
Medicare.

[[Page H5280]]

  Yet, we know from a 1996 study of Medicare heart attack victims that 
the additional tests and treatments did not help or harm these Medicare 
heart patients. Yet the defensive medicine test increased these heart 
attack patient's hospital and doctor's bills from five to nine percent. 
Medical malpractice premiums are also incorporated as direct Medicare 
costs that determine how much a doctor or hospital is paid for each 
Medicare patient they treat. Again, Medicare is currently paying every 
day for direct and indirect medical malpractice costs that do not 
improve the quality of health care that Medicare patients receive.
  We have to remember that this is a patient's bill of rights, so why 
would we want to drive up a patient's hospital and doctor bills if the 
patient's recovery are not improved? Medicare savings that would result 
from these medical malpractice reforms--which, as I mentioned earlier, 
the CBO estimated to be $1.5 billion over 10 years--could be applied to 
a new Medicare prescription drug benefit or to improving Medicare's 
preventive health care benefits like breast, cervical or prostate 
cancer screening. Likewise, patients who have private health insurance 
would ultimately benefit from lower medical bills, which keep health 
insurance premiums down, helping to ensure that health insurance 
remains affordable for individuals and employers. In the absence of 
this Thomas-Cox Medical Malpractice Reform Amendment, the health care 
dollars that are diverted from providing patient care and into the 
legal system will explode. Will redirecting health care dollars into 
trial lawyers' pockets and the courts provide patients with any better 
care--which should be the true measure of a patients bill of rights? 
Research has shown that the threat of medical malpractice lawsuits will 
not improve patient care.
  What I have concluded, as a Member committed to ensuring that managed 
care plans should be held liable for their decisions, is that Congress 
needs to:
  First enact a bill which ensures that patients have a indisputable 
right to hold health plans and all health care providers legal 
accountable for quality health care.
  Second, that the new limited right to sue created by Congress be 
balanced by pairing it with the medical malpractice reforms in the 
Thomas-Cox Medical Malpractice Reform Amendment--reforms that are 
similar to the reforms 20 states already have.
  In closing, I support a strong Patients' Bill of Rights that is 
balanced by holding health care providers legally accountable with the 
reasonable limits on medical malpractice lawsuits contained in the 
Thomas-Cox Medical Malpractice Reform Amendment.
  Mr. COX. Mr. Chairman, I yield myself 30 seconds for the purpose of 
correcting the record because the gentleman from Michigan has just 
stated several things that are factually in error.
  First, he said that this amendment would apply to health plans, that 
it would provide relief from damages to health plans. It does not. It 
has no application to health plans or insurers. If it did, the American 
Medical Association would not endorse it.
  Second, he said that it preempts State law. It preempts no State law. 
None.
  Third, he said that intentional conduct such as a rape would somehow 
go scott free under this. That is flat wrong. Intentional conduct is 
excepted.
  Lastly, he said that if a professional fell asleep or were negligent 
that he/she would not be responsible for punitive damages. That is 
simply false.
  Mr. Chairman, I reserve the balance of my time.
  Mr. CONYERS. Mr. Chairman, I yield myself 1 minute. I just want to 
ask the floor manager, the gentleman from California (Mr. Cox), if I 
heard him correctly when he said that this measure before us preempts 
no State law.
  I yield to him for a yes or no response.
  Mr. COX. Mr. Chairman, that is correct. Section 802 specifically 
states that.
  Mr. CONYERS. Mr. Chairman, I yield 2 minutes to the gentleman from 
Virginia (Mr. Scott), a member of the Committee on the Judiciary.
  Mr. SCOTT. Mr. Chairman, I thank the gentleman for yielding time. It 
is ironic that when you have a bill entitled Patients' Bill of Rights, 
we are spending all of our time stripping the patients of those rights.
  There are many issues in this amendment, about 10 different issues, 
we have got 20 minutes to explain them all which is about 2 minutes per 
issue as we strip our patients of their fundamental rights and 
traditional laws when they are victims of negligence.
  Questions like the statute of limitations. When do you lose your 
right to sue? What is a reasonable amount of time before you have to 
file your suit or lose your rights? Two minutes is not enough time to 
explain that.
  A cap on noneconomic damages. When you lose your sight, lose a limb, 
what is fair, particularly if you were nonworking, did not have any 
economic losses? What is fair when you suffer a situation like that? 
States have dealt with that. The amount in this bill is one of the 
lowest found anywhere in the country.
  The complicated issue of joint and several liability. If everybody 
agrees that you have got a $100,000 case, how do you ever collect if 
the HMO is partly at fault, the doctor is partly at fault, maybe the 
nurse is, maybe the hospital, how do you ever get recovery, 
particularly if one of them is about to go bankrupt?

                              {time}  2045

  We cannot discuss that in 2 minutes.
  The collateral source rule, where you have a person who has paid an 
insurance premium and has a benefit, who ought to get the benefit of 
that? Should it be the one that paid the premium, should it be Blue 
Cross/Blue Shield getting their money back, or should it be the one 
that created the damage altogether? This bill provides that out of the 
three, the one that created the problem gets the benefit.
  The calculation of the periodic payments, that is a calculated issue. 
We know with lottery proceeds, you can get a lump sum or get your money 
strung out. You know if you get the lump sum, you only get half the 
money. How does this work out? Do they get to just pay half the money, 
or do they get to spread it out? We do not have time to show that 
calculation and how unfair this is.
  This is not only bad policy, it is a bad process, and I would hope 
that we would defeat this amendment.
  Mr. COX. Mr. Chairman, I yield myself 30 seconds.
  Mr. Chairman, in fact, the purpose of this legislation is to make 
sure that we do not have runaway health care costs and that we have 
more people insured. The legislation states, and it is worth pointing 
out, because we have heard something slightly different here, that 
there will be unlimited damages paid to compensate patients for their 
medical injuries. Unlimited, without limit.
  We are, however, putting some regulations on abuses by lawyers. For 
example, we want to make sure that there is a fair share rule. If you 
cause 95 percent of the problem, you pay 95 percent of the damage. That 
is not the rule today.
  Mr. CONYERS. Mr. Chairman, I yield 2 minutes to the gentlewoman from 
California (Mrs. Davis).
  Mrs. DAVIS of California. Mr. Chairman, I rise today in opposition to 
the Thomas malpractice amendment. I want you to know that throughout my 
tenure in the State legislature I supported malpractice reform. I agree 
with the gentleman from California (Mr. Thomas) that we do need to 
address this issue, and I am saddened that this amendment was developed 
in the middle of the night.
  Malpractice reform is too big and too important an issue to be 
addressed in this hasty, unclear manner. If you want to ask any member 
of the State legislature over the last few years how they feel about 
that, I am sure they will reflect that opinion.
  I am just not sure if you realize how enormous an issue it is. Do you 
realize that this bill would put medical malpractice cases in Federal 
courts for the first time? It is not a small, minor change. It is a 
major policy decision that should be debated on its own, rather than as 
a sideline discussion to another major bill.
  I am pleased that the gentleman from California (Mr. Thomas) brought 
up the letter from the AMA, because if he had only read the second 
paragraph, I think you would have gotten a different feeling about this 
letter. It goes on to say, in fact, the AMA policy has long supported 
medical liability reform. They have in California, it is called MICRA. 
They appreciate the efforts. But they also say that they have expressed 
concerns in the past about coupling such reforms with the patients' 
bill of rights. They are concerned that this amendment could interfere 
with the ultimate passage of meaningful patients' rights legislation.
  I spoke to a physician earlier today who said, yes, complicate it and 
kill it.

[[Page H5281]]

 I hope that is not what we are trying to do here.
  I know in the State assembly I tried to bring together attorneys and 
physicians around this matter to develop a compromise on malpractice 
reform. There is just no way that this House can find the right answer 
to this important issue without bringing all the parties involved to 
the table.
  If we want effective and responsible malpractice reform, I urge 
Members to vote against the Thomas amendment.
  Mr. COX. Mr. Chairman, I yield myself 10 seconds to point out that 
the American Medical Association has strongly been in support of these 
reforms every year I have been in Congress, for 15 years, and their 
only concern, as the gentlewoman did not let on, is President Clinton, 
representing the trial lawyers, threatened to veto the legislation if 
they included the provision they wanted.
  Mr. Chairman, I yield 5 minutes to the gentleman from Wisconsin (Mr. 
Sensenbrenner), the chairman of the Committee on the Judiciary.
  Mr. SENSENBRENNER. Mr. Chairman, the purpose of this amendment is to 
make sure that health care coverage is more available and affordable to 
all Americans.
  These medical malpractice reform provisions will benefit the American 
people by limiting costs to doctors, hospitals, and other health care 
providers, which in turn will improve access to affordable health care 
insurance for all. Unfortunately, the current medical malpractice 
litigation is a wealth redistribution lottery that benefits trial 
lawyers, instead of an efficient system designed to fairly compensate 
those injured by the wrongful acts of others.
  Medical malpractice lawyers often simply target the perceived deep 
pockets of doctors, hospitals and insurance companies. In many cases, 
defendants know a lawsuit would not succeed on its merits, but agree to 
settle out of court just to avoid the endless and expensive legal 
process. In the end, the lawyers often walk away with as much money as 
the plaintiff. This injustice raises the price of health care, causes 
unwarranted personal anguish and unfairly damages reputations.
  Doctors and hospitals should be held responsible for truly negligent 
behavior resulting in actual harm. But a system that perpetuates the 
concept of joint and several liability has no effective mechanism, such 
as the cap on noneconomic damages, to deter frivolous lawsuits is 
simply not just.
  America is the only country in the world that provides unlimited 
compensation for noneconomic damages. Of course, noneconomic damages 
are separate from and do not include payment for medical costs, lost 
wages and other out-of-pocket expenses. Therefore, a cap on noneconomic 
damages would not in any way limit the amount of money an injured 
plaintiff could receive for their hospital costs, doctor bills, other 
medical expenses, and lost wages.
  Malpractice insurance is expensive because many of the claims brought 
against doctors and other health care providers are lengthy and 
frivolous. In the year 2000, the average medical malpractice claim took 
more than 5 years to settle. Statistics also show that 80 percent of 
all medical malpractice claims do not even involve a negligent adverse 
event to the plaintiff. Furthermore, only one out of six plaintiffs who 
receive compensation from these claims present any evidence of 
negligent medical injury.
  We also have the ever more prevalent problem of doctors practicing 
defensive medicine. Many doctors are ordering unnecessary and costly 
medical tests and procedures solely to insulate themselves from 
potential lawsuit and not for the medical benefit of their patients. 
For example, conservative estimates predict that with effective medical 
malpractice tort reform, $600 million a year would be saved in Medicare 
payments in just the area of treating cardiac disease.
  Let me be perfectly clear about who benefits from our current health 
care liability system: the trial lawyers in America, who continue to 
line their pockets with each outrageous verdict or settlement. 
Congress' concern should be helping improve America's health care 
system, not helping the trial lawyers purchase fancier homes, cars, 
boats, and country club membership.
  This amendment is clearly needed if we are going to make a definitive 
step today to improve the health care system. The AMA supporters of the 
Ganske-Dingell patients' bill of rights approach recognized this fact, 
as was stated by the chairman of the Committee on Ways and Means 
earlier tonight.
  My colleagues, the choice is simple: the more dollars which are spent 
on medical malpractice lawsuits, insurance premiums and lawyers, the 
fewer dollars there are for Americans to receive quality medical care. 
Let us put patients' rights ahead of lawyers' avarice, and support this 
much needed amendment.
  Mr. CONYERS. Mr. Chairman, I yield myself 20 seconds merely to point 
out to the distinguished floor manager, the gentleman from California 
(Mr. Cox), that on page 10, section 809, lines 21 and 22, it says, 
``This title shall apply to any health care lawsuit brought in a 
Federal or State court.'' I presume the State court is operating under 
State law.
  Mr. Chairman, I yield 2 minutes to the distinguished gentleman from 
New York (Mr. Nadler), a member of the Committee on the Judiciary.
  Mr. NADLER. Mr. Chairman, a few minutes ago this House by a party-
line vote adopted the Norwood amendment which caps punitive damages at 
$1.5 million and caps noneconomic damages at $1.5 million.
  This amendment will take both noneconomic damages, pain and 
suffering, loss of a limb, and say that a child who lost a limb should 
be compensated at only $250,000, and punitive damages should be 
compensated at only $250,000.
  If this amendment passes, both amendments will be in place and the 
bill will totally contradict itself, because in one place it will say 
$1.5 million and in the other place, $250,000. The attempt by the 
Republican majority is to kill this bill through poison pill 
amendments. They have done two contradictory amendments.
  Secondly, let me point out that by capping punitive damages at 
$250,000, the purpose of punitive damages is to deter willful, grossly 
negligent misconduct. We know of companies that have calculated that 
they will let people die, they will put unsafe things in their cars or 
other things, because it is cheaper to pay the damages than to change 
what they are doing.
  Punitive damages are designed to stop that. By limiting punitive 
damages to $250,000, you will get HMOs that will calculate that it is 
cheaper to deny medical care, cheaper to pay the economic damages, 
cheaper to pay the $250,000 limited punitive damages, no matter how 
willful, how grossly negligent, how deceitful, how willful they may be. 
It is cheaper to kill people and save money, because we have removed 
the one deterrent the law has.
  This is an amendment that should never be passed. But, of course, it 
does not really matter, since we already killed the bill, which will 
never pass the Senate, by putting in the Norwood amendment. But we 
should not set the precedent of saying to large corporations, calculate 
the cost benefit. Do things that may kill or maim people if it is 
cheaper for your bottom line.
  Mr. COX. Mr. Chairman, I yield myself 20 seconds to correct the 
gross, egregious and ought to be subject to punitive damages if we have 
the kinds of standards we are talking about here in the Congress 
misstatements of what this amendment is all about.
  Punitive damages under this legislation are unlimited. They are not 
limited to $250,000. The gentleman apparently did not read the 
amendment. There is a base of $250,000, or twice economic damages, and 
economic damages are unlimited under this legislation.
  He said punitive damages also are limited for health insurance plans 
or HMOs. This amendment has no application to HMOs or health insurance 
plans. None.
  Mr. CONYERS. Mr. Chairman, I am pleased to yield 2 minutes to the 
gentlewoman from Texas (Ms. Jackson-Lee), a valued member of the 
Committee on the Judiciary.
  (Ms. JACKSON-LEE of Texas asked and was given permission to revise 
and extend her remarks.)
  Ms. JACKSON-LEE of Texas. Mr. Chairman, I am glad the distinguished 
gentleman from California made the

[[Page H5282]]

 point about this amendment. It has nothing to do with HMOs, so he 
says, and the patients' bill of rights.
  This is the very point that we are making about this amendment. It is 
clearly a poison pill. It is the adding of a medical malpractice issue. 
No matter how relevant it may be to the general discussion of medical 
malpractice, both Federal and State law, it has no relevance in this 
debate.
  The real issue becomes that those who have been fighting for the 
medical malpractice revisions have done so and have been refuted and 
rejected for session after session, and they use the patients' bill of 
rights when we are trying to reestablish the sanctity of the patient 
and physician relationship to now do this.
  The most egregious part of this particular amendment is the cap on 
noneconomic damages, for what that says is that if you have a child age 
5 with the potential of growth, education and opportunity, and through 
some tragic accident at age 5 they lose their limbs, then you will 
limit the ability of that child growing into adulthood to be able to be 
cared for independently by capping the noneconomic damages.

                              {time}  2100

  This is not a case of frivolousnes; this is not a case where we are 
suggesting that there are frivolous lawsuits. This is mean-spirited.
  Then, secondarily what this does is it gives the medical device 
companies, the ones that have the MRI, the ones that have the needles, 
a buyout. The buyout is, even if they are approved by the FDA, they get 
a buyout. We know that government agencies are not perfect, so that 
means if we got some blanket approval 25 years ago for a device, we 
have no ability, if someone is injured, to recover.
  This is heinous. This is, I would say, one of the worst amendments we 
have, and the American Medical Association will have nothing to do with 
it, and they should not be misused as they are being misused. Vote this 
amendment down.
  Mr. COX. Mr. Chairman, I yield 2 minutes to the gentleman from 
Louisiana (Mr. Tauzin), the chairman of the Committee on Energy and 
Commerce.
  Mr. TAUZIN. Mr. Chairman, as a cosponsor of the amendment, let me 
first make the point that no one argues, no one can argue, that 
unnormally high, runaway malpractice jury awards harms our health care. 
First of all, it raises costs, it absolutely raises the cost of medical 
malpractice insurance of physicians and gets passed on to all of us.
  Secondly, we all know what it does to physicians. It sends a chilling 
effect to physicians around the country who end up practicing defensive 
medicine; in fact, doing things not necessary, not required, just to 
protect themselves from the lawyers who might end up suing them.
  Today, we can do something about it. We can pass this amendment 
modeled after the California law.
  What is beautiful about this amendment is that not only does this 
amendment place some caps on those runaway charges that juries 
sometimes make that we all pay for, but it does so in a way that does 
not preempt the State law. For example, if your State caps noneconomic 
damages at $500,000, so be it. If your State has any cap on punitive 
damages, then your State law in that area is preserved. If your State 
wants to place a $500,000 cap on punitive damages 3 years from now, it 
is permitted to do so under this amendment.
  In short, our authors have put this amendment together in such a way 
that it helps a number of States restrain runaway malpractice costs 
and, at the same time, preserves your State's ability to do it 
differently if you want to do it differently in your State.
  Mr. Chairman, this is modest medical malpractice reform. We passed 
some recently on medical devices that were going out of business, not 
because they were losing lawsuits; simply because the cost of defending 
the lawsuits was driving the companies out of the business of making 
things, like shunts for kids with hydrocephalic cases or limbs for 
children who have lost their limbs to cancer.
  When we passed that medical malpractice reform a few years ago, those 
manufacturers went back into business. Today, we have a chance to keep 
our health care system in business. Pass this good amendment.
  Mr. CONYERS. Mr. Chairman, I yield myself 1\1/2\ minutes to first, 
hopefully correct the chairman of the Committee on the Judiciary, the 
gentleman from Wisconsin (Mr. Sensenbrenner), who asserted that lawyers 
were getting huge fees. All fees, most Members know, are controlled by 
the court. Any exorbitant fees are not permitted. And from time 
immemorial, lawyers get one-third of the recovery. If that is what we 
are complaining about, we should make it clear that anything more 
excessive is controlled by the court.
  Then, the gentleman from California (Mr. Cox), the floor manager, has 
asserted that the bill does not cap punitive damages. Now if, 
unfortunately, a physician rapes a patient, many would say she has no 
economic damages, she may have no lost wages and negligible medical 
costs. So the Cox amendment would, in that case, cap her punitive 
damages at $250,000.
  Mr. COX. Mr. Chairman, that is false. That is false. The gentleman 
must yield on that point.
  Mr. CONYERS. Sir, control yourself.
  So, I say to the gentleman from California (Mr. Cox), it is 
incorrect, I repeat, incorrect to assert that this amendment does not 
cap punitive damages. If the gentleman takes issue with that, he may 
use his own time and explain to the membership what he disagrees about.
  Mr. Chairman, I yield 1 minute to the gentleman from Iowa (Mr. 
Ganske).
  Mr. GANSKE. Mr. Chairman, I stood on this floor arguing for medical 
malpractice reform, and I continued before that, but not on this bill.
  Let me read to my colleagues from a letter from the AMA on this. 
``AMA policy has long supported medical liability reform, and we 
appreciate your efforts in this regard. As you know, we have expressed 
concerns in the past about coupling such reforms with the Patients' 
Bill of Rights. As we enter into the conference for the Patients' Bill 
of Rights, it continues to be our hope that controversy surrounding 
this amendment will not interfere with the ultimate passage of a 
meaningful Patients' Bill of Rights.''
  We have just passed an amendment that I think will make the 
conference more difficult. I think if this amendment to this bill 
passes, the conference will be really difficult. I continue to be a 
supporter for medical malpractice reform. I would like to see it come 
up another time.
  I urge a no vote on this amendment.
  Mr. COX. Mr. Chairman, I yield myself 45 seconds to correct the 
record.
  We have the right of free speech here on the floor of the House, but 
it is very important that we stick to the facts. The bill says very 
clearly that, first of all, punitive damages are not limited, but 
rather, they are fixed in amount, in a variable amount that can rise to 
infinity at twice economic damages.
  Second, the gentleman from Michigan stated an outrageous example. He 
says if a physician rapes someone, that they would somehow be shielded 
from liability by this amendment or some other act of Congress. What 
this amendment very clearly states is that anyone who specifically 
intends to cause harm has no place in this provision. It does not 
apply.
  Mr. Chairman, I yield 1 minute to the gentleman from Kentucky (Mr. 
Fletcher), the author of so much of the good work that the President 
and the Congress are bringing to the floor today.
  Mr. FLETCHER. Mr. Chairman, as a practicing physician, the 
possibility of malpractice was always there in the back of your mind, 
because you wanted to make sure you delivered the most quality care you 
could to your patients.
  I can think of generally, probably a day did not go by when there 
were things that you felt like, well, I do not really think we need 
this, but because of the way malpractice is, we are going to order a 
specific test. A patient that comes in with a headache, you may not see 
them again for a while, and you order an $800 or a $1,000 MRI just to 
make sure that if something happens way in the future that you do not 
incur some sort of frivolous lawsuit.
  But let me talk about a couple of things. One, according to Daniel P. 
Kessler, an associate professor at Stanford Business School, when he 
looked

[[Page H5283]]

at direct costs, he said they may be relatively small, the direct costs 
of liability. I think clearly we can say they are fairly significant. 
But they are small relative to the indirect costs which he estimates 
five times.
  For that reason and for the quality of care, to make sure that we do 
not promote defensive medicine, I urge my colleagues to support this, 
as most of the physicians across the country would agree.
  Mr. CONYERS. Mr. Chairman, I am pleased to yield 1 minute to the 
gentlewoman from Ohio (Mrs. Jones), a lawyer, prosecutor, and former 
judge.
  Mrs. JONES of Ohio. Mr. Chairman, as we sit here debating a Patients' 
Bill of Rights, we stopped talking about the patients' rights and 
started reading letters from the AMA saying, well, I do not want the 
doctors to be any more liable, the HMOs, so we are happy with the 
legislation.
  I would suggest to those of my colleagues on the floor of this House, 
walk a mile in the shoes of someone who has been injured, walk a mile 
in the shoes of a family member who has a child that has been maimed or 
blinded, and you will not be talking about limits, you will be talking 
about, let me get to court and establish my damages, and if I establish 
them, pay me; and if they have been negligent or extremely negligent, 
let me get punitive damages.
  Let us get realistic, I say to my colleagues. We as significant 
Members of Congress can pass legislation that will not be questionable, 
that will not be left to a court to interpret. We can make it clear to 
the people of these United States that we are going to stand up for 
patients' rights, that we are going to stand up and allow them to 
collect if they are damaged.
  Mr. COX. Mr. Chairman, I yield 2 minutes to the gentleman from 
Pennsylvania (Mr. Toomey).
  Mr. TOOMEY. Mr. Chairman, I thank the gentleman from California for 
yielding time.
  I would like to commend the sponsors of this amendment. I introduced 
bills both in the previous Congress and in this Congress that are 
substantially the same as this amendment, so I am grateful that we are 
going to have a chance to include this in legislation that is moving.
  Why do we need medical malpractice reform? It is simple. Medical 
malpractice awards are out of control. Medical malpractice awards are 
draining millions of dollars from health care and putting it into 
courtrooms and trial lawyers. They are contributing significantly to 
the staggering increase in health care costs. They are forcing doctors 
to practice defensive medicine to protect themselves against, very 
often, meritless claims, and these awards are forcing some doctors to 
leave their specialties altogether.
  My State of Pennsylvania has been particularly hard hit by what is 
now a legal system run amok. We rank second in the Nation in medical 
malpractice judgments. We suffer through jury verdicts that are amongst 
the highest, twice the level of California, which has this kind of 
medical malpractice reform. As a result, doctors in my State often pay 
premiums that are twice the level of California, often over $100,000 a 
year just for insurance; good doctors who have never harmed a soul, who 
have never been negligent.
  Mr. Chairman, this is long overdue. This provision applies to all 
health care providers; it provides reasonable parameters on awards. It 
eliminates the insidious application of joint and several liability; 
and that, in layman terms, simply means that defendants will be 
required to pay judgments in proportion to their responsibility, not in 
proportion to the thickness of their wallet.
  Finally, Mr. Chairman, many of us are concerned that what we do here 
in Washington respect the rights of the States. This amendment does 
exactly that. This amendment says that if there is a State that has a 
medical malpractice law on the books, then that State law will prevail. 
If a State has no law whatsoever, then this amendment would prevail. If 
a State has no law and subsequently chooses to pass a law, then this 
would become irrelevant in that State; the State law would then once 
again prevail. This respects States' rights. This is going to help 
restore funding to health care instead of to trial lawyers.
  I urge my colleagues to support this amendment.
  Mr. CONYERS. Mr. Chairman, I reserve my time.
  Mr. COX. Mr. Chairman, I yield 2 minutes to the distinguished 
gentleman from Louisiana (Mr. McCrery), a member of the Committee on 
Ways and Means.
  Mr. McCRERY. Mr. Chairman, placing reasonable caps on medical 
malpractice will help us, as the gentleman from Louisiana pointed out 
(Mr. Tauzin), to fight health care inflation. In 1999, fully 13 percent 
of our gross domestic product went to health care expenses. That number 
will climb to almost 16 percent before this decade is over. At some 
point, this trend becomes unsustainable and some sort of national 
health care system in which politicians ration health care becomes 
inevitable.
  Our medical malpractice system is a drag on the health care system in 
many ways. Dollars spent on lawyers, enormous jury awards and 
settlements to avoid litigation are not being spent on patient care. 
Data from the insurance analyst A.M. Best show that injured claimants 
received less than one-third of total malpractice premiums in 1996, 
while attorneys' fees, the cost of expert witnesses and other court 
costs eat up more than half.
  The fear of being sued encourages defensive medicine, extra tests and 
procedures which may help insulate physicians from being sued, but do 
nothing for patients, other than add to their bills. The amendment 
before us strikes an appropriate balance. It permits States to enact 
their own medical malpractice laws, if they wish, but it does set a 
standard which will govern malpractice actions in States which have 
failed to enact their own reforms.
  Finally, it is critical to remember that nothing in this amendment 
denies injured plaintiffs from obtaining adequate redress, including 
compensation for 100 percent of their economic losses, their medical 
costs, their lost wages, future lost wages. Instead, though, this 
amendment places reasonable limits on noneconomic and punitive damages.
  As the American Medical Association noted in testimony in 1996, 
``While these can be emotionally charged issues, the fact remains that 
the current tort system, driven as it is by the potential for unlimited 
attorneys' fees and unlimited compensation for intangible losses, is 
unable to resolve medical liability claims effectively and 
efficiently.''

                              {time}  2115

  ``Moreover, even with the cap of a quarter of a million dollars, the 
United States would be the most generous country in the world in 
compensating for noneconomic losses.''
  This is a balanced amendment. It will do great good for our health 
care system in this country.
  Mr. CONYERS. Mr. Chairman, I reserve my time.
  Mr. COX. Mr. Chairman, I yield 1 minute to the gentleman from 
Pennsylvania (Mr. Greenwood), a member of the Committee on Energy and 
Commerce.
  Mr. GREENWOOD. Mr. Chairman, I thank the gentleman for yielding me 
time.
  In my State of Pennsylvania, it was not very long ago that when I 
looked at the medical community I saw a group of folks doing pretty 
well. They seemed to have a nice income. They seemed to be enjoying 
their profession. They seemed to be on top of the world.
  In the last 15 years or so I have seen a dramatic change in my 
doctors from the State of Pennsylvania. I have seen them hit with 
medical malpractice rates that are phenomenal, a 45 percent increase in 
the medical malpractice rates just in the last year in the State of 
Pennsylvania.
  I knew a physician. He was a good orthopedist, one of the best. All 
he liked to do was get up in the morning and fix broken bones. His 
medical malpractice rates got so high that his daughter secretly paid 
his premiums for him just so he would not give up and quit. Finally, 
when he found out how high those premiums were, he left the State of 
Pennsylvania and we lost one of our finest physicians.
  The doctors in my State of Pennsylvania have had it. We have got to 
pass this medical malpractice tonight.
  Mr. CONYERS. Mr. Chairman, I yield 1 minute to the gentleman from 
Texas (Mr. Sandlin).

[[Page H5284]]

  Mr. SANDLIN. Mr. Chairman, last night one could watch network TV or 
C-SPAN and by switching back and forth one could watch two shows, 
``Let's Make a Deal'' and ``The Price Is Right.'' If one listened very 
closely in the middle of night, one could almost hear the White House 
say, Come on down. You are our next contestant.
  We still do not know what was behind doors 1, 2, or 3; and we are 
wondering what the grand prize was. We know this amendment was filed 
for political cover. Let us be straight about it. That being said, let 
us get to the facts.
  All of us are concerned about the high cost of medical care. However, 
medical malpractice does not contribute to that. An October 1992 study 
of the Congressional Budget Office concluded and said:

       Malpractice insurance premiums account for less than one 
     penny of each dollar spent annually on the Nation's health 
     care.

  A study funded by the Texas Medical Association, the Trial Lawyers' 
Association, the Texas Hospital Association said:

       Changing the medical professional liability system will 
     have minimal cost savings impact on their overall health care 
     delivery system in Texas.

  Many factors contribute to increased medical costs. This is not one 
of them. Vote no on Thomas-Cox. It is pure politics. We know it. It is 
nothing more and the patients lose.


                         parliamentary inquiry

  Mr. COX. Mr. Chairman, does the minority have the right to close?
  The CHAIRMAN. The gentleman from California has the right to close.
  Mr. COX. Mr. Chairman, I yield myself 5 seconds to observe that this 
Chamber has on many occasions passed legislation of this type, and it 
has been scored by the Congressional Budget Office as saving $1.5 
billion.
  Mr. Chairman, I reserve the balance of my time.


                         parliamentary inquiry

  Mr. CONYERS. Parliamentary inquiry, Mr. Chairman.
  The CHAIRMAN. The chair finds that the gentleman from Michigan is not 
a ``manager'' of the pending measure within the meaning of clause 3(c) 
of rule XVII. Consequently, the gentleman from California has the right 
to close.
  Mr. CONYERS. Mr. Chairman, I thank the Chair for answering my 
anticipated question.
  Mr. Chairman, I yield the balance of my time to the gentlewoman from 
Colorado (Ms. DeGette).
  The CHAIRMAN. The gentlewoman is recognized for 1\1/4\ minutes.
  Ms. DeGETTE. Mr. Chairman, if this amendment passes, this bill will 
have completed its transformation from the Patients' Bill of Rights, to 
the providers' bill of rights. Make no mistake about it, under the 
Norwood amendment which just passed, patients will never be able to 
hold HMOs legally accountable because of an unreasonable burden of 
proof.
  If this amendment is passed, patients will now not be adequately 
compensated for their damages that they incur as a result of 
malpractice by doctors or any other providers.
  My colleague, the gentleman from California (Mr. Cox), says 
incorrectly that the bill provides unlimited economic damages. But he 
knows as well as everybody else here that State statutes limit economic 
damages to actual money paid out of pocket. So if there is someone who 
has medical bills of $2,000 and they have noneconomic damages of $1 
million, too bad. They are out of court. The only noneconomic damages 
they can get would be $4,000 under this amendment.
  Now where will this apply? In some of the most tragic situations, 
loss of a limb or sight, the loss of mobility, the loss of fertility, 
excruciating pain and permanent and severe disfigurement, also, the 
loss of a child or a spouse. There are a number of other damages that 
are limited. Do not take this out on the patients. Vote no on this 
amendment.
  Mr. COX. Mr. Chairman, I yield myself 15 seconds while they are 
setting up the chart to correct the misunderstanding of the 
gentlewoman.
  She described a situation in which there were for some reason, under 
State law, a limit on economic damages, there is no such limit in this 
bill, and that the limit amounted to $2,000 in a case and that that 
would mean twice the economic damages would be a $4,000 limit under 
this bill. But she misunderstands it because the limit in that case 
would be a quarter million dollars. That is the limit that would apply, 
the greater, not the lesser, of twice the economic damages or a quarter 
million dollars.
  Mr. Chairman, I will inquire how much time remains.
  The CHAIRMAN. The gentleman from California has 2 minutes remaining.
  Mr. COX. Mr. Chairman, I yield myself my remaining time.
  Mr. Chairman, I wish to address the Chamber from the floor because I 
wanted to draw attention to this chart.
  This describes the situation in America today in which insurance 
premiums paid by all of us here in this Chamber are distributed 
unequally to pay the costs of lawsuit abuse: 32.46 percent going to pay 
injured claimants; and 52 percent to pay attorneys, witnesses, expert 
witnesses, and other court expenses. That is wrong, and we are here to 
fix it.
  There is virtually a constitutional right in America to bring a bad 
lawsuit, and we count on the courts to throw the bad ones out. But in 
the Federal system today, because the courts are so busy, 93 percent of 
cases never get a single day of trial.
  That creates enormous opportunity for mischief, because then people 
can extort settlements, since everyone knows how expensive it is to 
wait it out and pay their lawyers while they finally might be one of 
the 7 percent of cases that get their day in court.
  We want to adopt a ``fair share'' rule. We want to say that if one 
committed 5 percent of the problem, then pay 5 percent of the damages. 
Let us say that a rapist drug dealer staggers into the emergency room 
with a knife wound and demands, in his drug-induced haze, to be 
operated on, and gives the emergency room fits.
  The surgeon that works on him does the best he can, but it is not 
perfect. The drug dealer and rapist sues. The jury finds he is 95 
percent responsible for his own knife wounds, but 5 percent of the 
problem lies with the hospital, because the physician was working too 
long.
  Today the hospital, us, the premium payer, can be made to pay 100 
percent because the drug dealer is without means. We want a fair share 
rule because if one pays premiums, one should not be denied health care 
in that way.
  Everyone knows this bill, which is very important, which we are going 
to pass, which expands patient protections, is going to raise the cost 
of insurance. We are trying to find ways to regulate it.
  If Members believe that all doctors are bad and all lawyers are good, 
this amendment is not for them. But if Members believe that some 
lawyers need some regulation, as well as HMOs getting regulation 
properly in this bill, vote aye for lower health care premiums and more 
access to health care.
  Mr. SHAYS. Mr. Chairman, I rise in support of the Thomas-Cox 
amendment. As one who has long supported reforming our medical 
malpractice laws, I am pleased to support this amendment.
  This amendment is similar to legislation Mr. Greenwood and I 
introduced, the Medical Malpractice Rx Act, which will help prevent 
frivolous, excessive lawsuits that are driving up the cost of health 
care, forcing doctors to practice defensive medicine, and making access 
to affordable health insurance more difficult for the average American.
  Only 40 cents of every dollar paid to litigate and settle malpractice 
cases is ever paid to the actual victims. Lawsuits impose unnecessarily 
high litigation costs on all parties and these costs are then passed 
along to consumers. The rate of malpractice cases has doubled in the 
past ten years and on average 120,000 lawsuits are filed against 
America's 500,000 physicians at any one time. That's one lawsuit for 
every four doctors.
  It is imperative we adopt the Thomas-Cox amendment to discourage 
abuse of our legal system and curb the unsustainable growth of medical 
costs in our country. I urge my colleagues on both sides of the aisle 
to vote in favor of this amendment.
  The CHAIRMAN. The question is on the amendment offered by the 
gentleman from California (Mr. Thomas).
  The question was taken; and the Chairman announced that the ayes 
appeared to have it.


                             Recorded Vote

  Mr. CONYERS. Mr. Chairman, I demand a recorded vote.
  A recorded vote was ordered.

[[Page H5285]]

  The vote was taken by electronic device, and there were--ayes 207, 
noes 221, not voting 5, as follows:

                             [Roll No. 330]

                               AYES--207

     Aderholt
     Akin
     Armey
     Bachus
     Baker
     Ballenger
     Barr
     Bartlett
     Barton
     Bass
     Bereuter
     Biggert
     Bilirakis
     Blunt
     Boehlert
     Boehner
     Bonilla
     Bono
     Brady (TX)
     Brown (SC)
     Bryant
     Burr
     Burton
     Buyer
     Callahan
     Calvert
     Camp
     Cannon
     Cantor
     Capito
     Castle
     Chabot
     Coble
     Collins
     Combest
     Cooksey
     Cox
     Cramer
     Crane
     Crenshaw
     Cubin
     Culberson
     Cunningham
     Davis, Jo Ann
     Davis, Tom
     Deal
     DeLay
     DeMint
     Doolittle
     Dreier
     Dunn
     Ehlers
     English
     Everett
     Ferguson
     Flake
     Fletcher
     Foley
     Forbes
     Fossella
     Frelinghuysen
     Gallegly
     Gekas
     Gibbons
     Gilchrest
     Gillmor
     Goode
     Goodlatte
     Goss
     Granger
     Graves
     Green (WI)
     Greenwood
     Gutknecht
     Hansen
     Hart
     Hastings (WA)
     Hayes
     Hayworth
     Hefley
     Herger
     Hilleary
     Hobson
     Hoekstra
     Horn
     Hostettler
     Houghton
     Hulshof
     Hunter
     Hutchinson
     Hyde
     Isakson
     Issa
     Johnson (CT)
     Johnson, Sam
     Jones (NC)
     Keller
     Kelly
     Kennedy (MN)
     Kerns
     Kingston
     Kirk
     Knollenberg
     Kolbe
     LaHood
     Largent
     Latham
     Leach
     Lewis (CA)
     Lewis (KY)
     Linder
     LoBiondo
     Lucas (KY)
     Lucas (OK)
     Manzullo
     McCrery
     McHugh
     McInnis
     McKeon
     Mica
     Miller (FL)
     Miller, Gary
     Moran (KS)
     Myrick
     Ney
     Northup
     Norwood
     Nussle
     Osborne
     Ose
     Otter
     Oxley
     Pence
     Peterson (MN)
     Peterson (PA)
     Petri
     Pickering
     Pitts
     Platts
     Pombo
     Portman
     Pryce (OH)
     Putnam
     Quinn
     Radanovich
     Ramstad
     Regula
     Rehberg
     Reynolds
     Riley
     Rogers (KY)
     Rogers (MI)
     Rohrabacher
     Ros-Lehtinen
     Roukema
     Royce
     Ryan (WI)
     Ryun (KS)
     Saxton
     Scarborough
     Schaffer
     Schrock
     Sensenbrenner
     Sessions
     Shadegg
     Shaw
     Shays
     Sherwood
     Shimkus
     Shuster
     Simmons
     Simpson
     Skeen
     Smith (MI)
     Smith (NJ)
     Smith (TX)
     Souder
     Stearns
     Stenholm
     Stump
     Sununu
     Sweeney
     Tancredo
     Tauzin
     Taylor (NC)
     Thomas
     Thornberry
     Thune
     Tiahrt
     Tiberi
     Toomey
     Traficant
     Upton
     Vitter
     Walden
     Walsh
     Wamp
     Watkins (OK)
     Watts (OK)
     Weldon (FL)
     Weldon (PA)
     Weller
     Whitfield
     Wilson
     Wolf
     Young (AK)
     Young (FL)

                               NOES--221

     Abercrombie
     Ackerman
     Allen
     Andrews
     Baca
     Baird
     Baldacci
     Baldwin
     Barcia
     Barrett
     Becerra
     Bentsen
     Berkley
     Berman
     Berry
     Bishop
     Blagojevich
     Blumenauer
     Bonior
     Borski
     Boswell
     Boucher
     Boyd
     Brady (PA)
     Brown (FL)
     Brown (OH)
     Capps
     Capuano
     Cardin
     Carson (IN)
     Carson (OK)
     Chambliss
     Clay
     Clayton
     Clement
     Clyburn
     Condit
     Conyers
     Costello
     Coyne
     Crowley
     Cummings
     Davis (CA)
     Davis (FL)
     Davis (IL)
     DeFazio
     DeGette
     Delahunt
     DeLauro
     Deutsch
     Diaz-Balart
     Dicks
     Dingell
     Doggett
     Dooley
     Doyle
     Duncan
     Edwards
     Ehrlich
     Emerson
     Engel
     Eshoo
     Etheridge
     Evans
     Farr
     Fattah
     Filner
     Ford
     Frank
     Frost
     Ganske
     Gephardt
     Gilman
     Gonzalez
     Gordon
     Graham
     Green (TX)
     Grucci
     Gutierrez
     Hall (OH)
     Hall (TX)
     Harman
     Hastings (FL)
     Hill
     Hilliard
     Hinchey
     Hinojosa
     Hoeffel
     Holden
     Holt
     Honda
     Hooley
     Hoyer
     Inslee
     Israel
     Istook
     Jackson (IL)
     Jackson-Lee (TX)
     Jefferson
     Jenkins
     John
     Johnson (IL)
     Johnson, E. B.
     Jones (OH)
     Kanjorski
     Kaptur
     Kennedy (RI)
     Kildee
     Kilpatrick
     Kind (WI)
     King (NY)
     Kleczka
     Kucinich
     LaFalce
     Lampson
     Langevin
     Lantos
     Larsen (WA)
     Larson (CT)
     LaTourette
     Lee
     Levin
     Lewis (GA)
     Lofgren
     Lowey
     Luther
     Maloney (CT)
     Maloney (NY)
     Mascara
     Matheson
     Matsui
     McCarthy (MO)
     McCarthy (NY)
     McCollum
     McDermott
     McGovern
     McIntyre
     McKinney
     McNulty
     Meehan
     Meek (FL)
     Meeks (NY)
     Menendez
     Millender-McDonald
     Miller, George
     Mink
     Mollohan
     Moore
     Moran (VA)
     Morella
     Murtha
     Nadler
     Napolitano
     Neal
     Nethercutt
     Oberstar
     Obey
     Olver
     Ortiz
     Owens
     Pallone
     Pascrell
     Pastor
     Payne
     Pelosi
     Phelps
     Pomeroy
     Price (NC)
     Rahall
     Rangel
     Reyes
     Rivers
     Rodriguez
     Roemer
     Ross
     Rothman
     Roybal-Allard
     Rush
     Sabo
     Sanchez
     Sanders
     Sandlin
     Sawyer
     Schakowsky
     Schiff
     Scott
     Serrano
     Sherman
     Shows
     Skelton
     Slaughter
     Smith (WA)
     Snyder
     Solis
     Spratt
     Stark
     Strickland
     Stupak
     Tanner
     Tauscher
     Taylor (MS)
     Terry
     Thompson (MS)
     Thurman
     Tierney
     Towns
     Turner
     Udall (CO)
     Udall (NM)
     Velazquez
     Visclosky
     Waters
     Watson (CA)
     Watt (NC)
     Waxman
     Weiner
     Wexler
     Wicker
     Woolsey
     Wu
     Wynn

                             NOT VOTING--5

     Lipinski
     Markey
     Paul
     Spence
     Thompson (CA)

                              {time}  2146

  Mr. ENGLISH changed his vote from ``no'' to ``aye.''
  So the amendment was rejected.
  The result of the vote was announced as above recorded.
  The CHAIRMAN. Under the rule, the Committee rises.
  Accordingly, the Committee rose; and the Speaker pro tempore (Mr. 
Bereuter) having assumed the chair, Mr. LaHood, Chairman of the 
Committee of the Whole House on the State of the Union, reported that 
that Committee, having had under consideration the bill (H.R. 2563) 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, pursuant to 
House Resolution 219, he reported the bill back to the House with 
sundry amendments adopted by the Committee of the Whole.
  The SPEAKER pro tempore. Under the rule, the previous question is 
ordered.
  Is a separate vote demanded on any amendment? If not, the Chair will 
put them en gros.
  The amendments were agreed to.
  The SPEAKER pro tempore. The question is on the engrossment and third 
reading of the bill.
  The bill was ordered to be engrossed and read a third time, and was 
read the third time.


                Motion to Recommit Offered by Mr. Berry

  Mr. BERRY. Mr. Speaker, I offer a motion to recommit.
  The SPEAKER pro tempore. Is the gentleman opposed to the bill?
  Mr. BERRY. Yes, Mr. Speaker, in its current form I am.
  The SPEAKER pro tempore. The Clerk will report the motion to 
recommit.
  The Clerk read as follows:
       Mr. Berry moves to recommit the bill H.R. 2563 to the 
     Committee on Ways and Means, the Committee on Energy and 
     Commerce, and the Committee on Education and the Workforce 
     with instructions that each report the same back to the House 
     forthwith with the following amendment:
       Strike all after the enacting clause and insert the 
     following:

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Bipartisan 
     Patient Protection Act''.
       (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.
Sec. 105. Health care consumer assistance fund.

                       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.

         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.

[[Page H5286]]

Sec. 153. Exclusions.
Sec. 154. Treatment of excepted benefits.
Sec. 155. Regulations.
Sec. 156. Incorporation into plan or coverage documents.
Sec. 157. Preservation of protections.

 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.
Sec. 203. Cooperation between Federal and State authorities.

   TITLE III--APPLICATION OF PATIENT PROTECTION STANDARDS TO FEDERAL 
                       HEALTH INSURANCE PROGRAMS

Sec. 301. Application of patient protection standards to Federal health 
              insurance programs.

TITLE IV--AMENDMENTS TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 
                                  1974

Sec. 401. Application of patient protection standards to group health 
              plans and group health insurance coverage under the 
              Employee Retirement Income Security Act of 1974.
Sec. 402. Availability of civil remedies.
Sec. 403. Limitation on certain class action litigation.
Sec. 404. Limitations on actions.
Sec. 405. Cooperation between Federal and State authorities.
Sec. 406. Sense of the Senate concerning the importance of certain 
              unpaid services.

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

        Subtitle A--Application of Patient Protection Provisions

Sec. 501. Application of requirements to group health plans under the 
              Internal Revenue Code of 1986.
Sec. 502. Conforming enforcement for women's health and cancer rights.

         Subtitle B--Health Care Coverage Access Tax Incentives

Sec. 511. Expanded availability of Archer MSAs.
Sec. 512. Deduction for 100 percent of health insurance costs of self-
              employed individuals.
Sec. 513. Credit for health insurance expenses of small businesses.
Sec. 514. Certain grants by private foundations to qualified health 
              benefit purchasing coalitions.
Sec. 515. State grant program for market innovation.

       TITLE VI--EFFECTIVE DATES; COORDINATION IN IMPLEMENTATION

Sec. 601. Effective dates.
Sec. 602. Coordination in implementation.
Sec. 603. Severability.

                  TITLE VII--MISCELLANEOUS PROVISIONS

Sec. 701. No impact on Social Security Trust Fund.
Sec. 702. Customs user fees.
Sec. 703. Fiscal year 2002 medicare payments.
Sec. 704. Sense of Senate with respect to participation in clinical 
              trials and access to specialty care.
Sec. 705. Sense of the Senate regarding fair review process.
Sec. 706. Annual review.
Sec. 707. Definition of born-alive infant.

                      TITLE VIII--REVENUE OFFSETS

               Subtitle A--Extension of Custom User Fees

Sec. 801. Further extension of authority to levy customs user fees.

                   Subtitle B--Tax Shelter Provisions

          Part I--Clarification of Economic Substance Doctrine

Sec. 811. Clarification of economic substance doctrine.

                           Part II--Penalties

Sec. 821. Increase in penalty on underpayments resulting from failure 
              to satisfy certain common law rules.
Sec. 822. Penalty on promoters of tax avoidance strategies which have 
              no economic substance, etc.
Sec. 823. Modifications of penalties for aiding and abetting 
              understatement of tax liability involving tax shelters.
Sec. 824. Failure to maintain lists.
Sec. 825. Penalty for failing to disclose reportable transaction.
Sec. 826. Registration of certain tax shelters without corporate 
              participants.
Sec. 827. Effective dates.

  Part III--Limitations on Importation or Transfer of Built-in Losses

Sec. 831. Limitation on importation of built-in losses.
Sec. 832. Disallowance of partnership loss transfers.

                    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, and a 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

[[Page H5287]]

     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 claim 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, and a 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 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, and a 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, and 
     a 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 
     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, and a 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

[[Page H5288]]

     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.--Except as provided in this paragraph or 
     paragraph (4), a group health plan, and a 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, and a 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) 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, and 
     a health insurance issuer offering health insurance coverage, 
     shall make a retrospective determination on an appeal of a 
     denial 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) Peer review of medical decisions by health care 
     professionals.--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--
       (A) shall be made by a physician (allopathic or 
     osteopathic); or
       (B) in a claim for benefits provided by a non-physician 
     health professional, shall be made by reviewer (or reviewers) 
     including at least one practicing non-physician health 
     professional of the same or similar specialty;

     with appropriate expertise (including, in the case of a 
     child, appropriate pediatric expertise) and acting within the 
     appropriate scope of practice within the State in which the 
     service is provided or rendered, 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 
     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, or 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 for 
     such review 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 a 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

[[Page H5289]]

     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 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 a 
     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 investigational 
     nature, or the evaluation of the medical facts, of the item, 
     service, or condition involved 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)). 
     Notwithstanding any other provision of this Act, any 
     exclusion of an exact medical procedure, any exact time limit 
     on the duration or frequency of coverage, and any exact 
     dollar limit on the amount of coverage that is specifically 
     enumerated and defined (in the plain language of the plan or 
     coverage documents) under the plan or coverage offered by a 
     group health plan or health insurance issuer offering health 
     insurance coverage and that is disclosed under section 
     121(b)(1) shall be considered to govern the scope of the 
     benefits that may be required: Provided, That the terms and 
     conditions of the plan or coverage relating to such an 
     exclusion or limit are in compliance with the requirements of 
     law.
       (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 section, 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.

[[Page H5290]]

       (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 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 clause 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.
       (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 a 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 of 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

[[Page H5291]]

     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, acting within the appropriate 
     scope of practice within the State in which the service is 
     provided or rendered, typically treats the condition, makes 
     the diagnosis, or provides the type of treatment under 
     review; or
       (ii) by a non-physician health care professional, a 
     reviewer (or reviewers) shall include at least one practicing 
     non-physician health care professional of the same or similar 
     specialty as the non-physician health care professional who, 
     acting within the appropriate scope of practice within the 
     State in which the service is provided or rendered, typically 
     treats the condition, makes the diagnosis, or provides the 
     type of treatment under review.
       (B) Practicing defined.--For purposes of this paragraph, 
     the term ``practicing'' means, with respect to an individual 
     who is a physician or other health care professional that the 
     individual provides health care services to individual 
     patients on average at least 2 days per week.
       (5) Pediatric expertise.--In the case of an external review 
     relating to a child, a reviewer shall have expertise under 
     paragraph (2) in pediatrics.
       (6) Limitations on reviewer compensation.--Compensation 
     provided by 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.

[[Page H5292]]

       (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 of 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) Compliance with the requirement of subsection (d)(1) 
     that only medically reviewable decisions shall be the subject 
     of independent medical review and with the requirement of 
     subsection (d)(3) that independent medical reviewers may not 
     require coverage for specifically excluded benefits.

       (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. The Secretary, or organization, shall 
     revoke a certification or deny a recertification with respect 
     to an entity if there is a showing that the entity has a 
     pattern or practice of ordering coverage for benefits that 
     are specifically excluded under the plan or coverage.
       (vii) Petition for denial or withdrawal.--An individual may 
     petition the Secretary, or an organization providing the 
     certification involves, for a denial of recertification or a 
     withdrawal of a certification with respect to an entity under 
     this subparagraph if there is a pattern or practice of such 
     entity failing to meet a requirement of this section.
       (viii) 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 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.
       (5) Report.--Not later than 12 months after the general 
     effective date referred to in section 601, the General 
     Accounting Office shall prepare and submit to the appropriate 
     committees of Congress a report concerning--
       (A) the information that is provided under paragraph 
     (3)(D);
       (B) the number of denials that have been upheld by 
     independent medical reviewers and the number of denials that 
     have been reversed by such reviewers; and
       (C) the extent to which independent medical reviewers are 
     requiring coverage for benefits that are specifically 
     excluded under the plan or coverage.

     SEC. 105. HEALTH CARE CONSUMER ASSISTANCE FUND.

       (a) Grants.--
       (1) In general.--The Secretary of Health and Human Services 
     (referred to in this section as the ``Secretary'') shall 
     establish a fund, to be known as the ``Health Care Consumer 
     Assistance Fund'', to be used to award grants to eligible 
     States to carry out consumer assistance activities (including 
     programs established by States prior to the enactment of this 
     Act) designed to provide information, assistance, and 
     referrals to consumers of health insurance products.
       (2) State eligibility.--To be eligible to receive a grant 
     under this subsection a State shall prepare and submit to the 
     Secretary an application at such time, in such manner, and 
     containing such information as the Secretary may require, 
     including a State plan that describes--
       (A) the manner in which the State will ensure that the 
     health care consumer assistance office (established under 
     paragraph (4)) will educate and assist health care consumers 
     in accessing needed care;
       (B) the manner in which the State will coordinate and 
     distinguish the services provided by the health care consumer 
     assistance office with the services provided by Federal, 
     State and local health-related ombudsman, information, 
     protection and advocacy, insurance, and fraud and abuse 
     programs;
       (C) the manner in which the State will provide information, 
     outreach, and services to underserved, minority populations 
     with limited English proficiency and populations residing in 
     rural areas;
       (D) the manner in which the State will oversee the health 
     care consumer assistance office, its activities, product 
     materials and evaluate program effectiveness;
       (E) the manner in which the State will ensure that funds 
     made available under this section will be used to supplement, 
     and not supplant, any other Federal, State, or local funds 
     expended to provide services for programs described under 
     this section and those described in subparagraphs (C) and 
     (D);
       (F) the manner in which the State will ensure that health 
     care consumer office personnel have the professional 
     background and training to carry out the activities of the 
     office; and
       (G) the manner in which the State will ensure that 
     consumers have direct access to consumer assistance personnel 
     during regular business hours.
       (3) Amount of grant.--
       (A) In general.--From amounts appropriated under subsection 
     (b) for a fiscal year, the Secretary shall award a grant to a 
     State in an amount that bears the same ratio to such amounts 
     as the number of individuals within the State covered under a 
     group health plan or under health insurance coverage offered 
     by a health insurance issuer bears to the total number of 
     individuals so covered in all States (as determined by the

[[Page H5293]]

     Secretary). Any amounts provided to a State under this 
     subsection that are not used by the State shall be remitted 
     to the Secretary and reallocated in accordance with this 
     subparagraph.
       (B) Minimum amount.--In no case shall the amount provided 
     to a State under a grant under this subsection for a fiscal 
     year be less than an amount equal to 0.5 percent of the 
     amount appropriated for such fiscal year to carry out this 
     section.
       (C) Non-federal contributions.--A State will provide for 
     the collection of non-Federal contributions for the operation 
     of the office in an amount that is not less than 25 percent 
     of the amount of Federal funds provided to the State under 
     this section.
       (4) Provision of funds for establishment of office.--
       (A) In general.--From amounts provided under a grant under 
     this subsection, a State shall, directly or through a 
     contract with an independent, nonprofit entity with 
     demonstrated experience in serving the needs of health care 
     consumers, provide for the establishment and operation of a 
     State health care consumer assistance office.
       (B) Eligibility of entity.--To be eligible to enter into a 
     contract under subparagraph (A), an entity shall demonstrate 
     that it has the technical, organizational, and professional 
     capacity to deliver the services described in subsection (b) 
     to all public and private health insurance participants, 
     beneficiaries, enrollees, or prospective enrollees.
       (C) Existing state entity.--Nothing in this section shall 
     prevent the funding of an existing health care consumer 
     assistance program that otherwise meets the requirements of 
     this section.
       (b) Use of Funds.--
       (1) By state.--A State shall use amounts provided under a 
     grant awarded under this section to carry out consumer 
     assistance activities directly or by contract with an 
     independent, non-profit organization. An eligible entity may 
     use some reasonable amount of such grant to ensure the 
     adequate training of personnel carrying out such activities. 
     To receive amounts under this subsection, an eligible entity 
     shall provide consumer assistance services, including--
       (A) the operation of a toll-free telephone hotline to 
     respond to consumer requests;
       (B) the dissemination of appropriate educational materials 
     on available health insurance products and on how best to 
     access health care and the rights and responsibilities of 
     health care consumers;
       (C) the provision of education on effective methods to 
     promptly and efficiently resolve questions, problems, and 
     grievances;
       (D) the coordination of educational and outreach efforts 
     with health plans, health care providers, payers, and 
     governmental agencies;
       (E) referrals to appropriate private and public entities to 
     resolve questions, problems and grievances; and
       (F) the provision of information and assistance, including 
     acting as an authorized representative, regarding internal, 
     external, or administrative grievances or appeals procedures 
     in nonlitigative settings to appeal the denial, termination, 
     or reduction of health care services, or the refusal to pay 
     for such services, under a group health plan or health 
     insurance coverage offered by a health insurance issuer.
       (2) Confidentiality and access to information.--
       (A) State entity.--With respect to a State that directly 
     establishes a health care consumer assistance office, such 
     office shall establish and implement procedures and protocols 
     in accordance with applicable Federal and State laws.
       (B) Contract entity.--With respect to a State that, through 
     contract, establishes a health care consumer assistance 
     office, such office shall establish and implement procedures 
     and protocols, consistent with applicable Federal and State 
     laws, to ensure the confidentiality of all information shared 
     by a participant, beneficiary, enrollee, or their personal 
     representative and their health care providers, group health 
     plans, or health insurance insurers with the office and to 
     ensure that no such information is used by the office, or 
     released or disclosed to State agencies or outside persons or 
     entities without the prior written authorization (in 
     accordance with section 164.508 of title 45, Code of Federal 
     Regulations) of the individual or personal representative. 
     The office may, consistent with applicable Federal and State 
     confidentiality laws, collect, use or disclose aggregate 
     information that is not individually identifiable (as defined 
     in section 164.501 of title 45, Code of Federal Regulations). 
     The office shall provide a written description of the 
     policies and procedures of the office with respect to the 
     manner in which health information may be used or disclosed 
     to carry out consumer assistance activities. The office shall 
     provide health care providers, group health plans, or health 
     insurance issuers with a written authorization (in accordance 
     with section 164.508 of title 45, Code of Federal 
     Regulations) to allow the office to obtain medical 
     information relevant to the matter before the office.
       (3) Availability of services.--The health care consumer 
     assistance office of a State shall not discriminate in the 
     provision of information, referrals, and services regardless 
     of the source of the individual's health insurance coverage 
     or prospective coverage, including individuals covered under 
     a group health plan or health insurance coverage offered by a 
     health insurance issuer, the medicare or medicaid programs 
     under title XVIII or XIX of the Social Security Act (42 
     U.S.C. 1395 and 1396 et seq.), or under any other Federal or 
     State health care program.
       (4) Designation of responsibilities.--
       (A) Within existing state entity.--If the health care 
     consumer assistance office of a State is located within an 
     existing State regulatory agency or office of an elected 
     State official, the State shall ensure that--
       (i) there is a separate delineation of the funding, 
     activities, and responsibilities of the office as compared to 
     the other funding, activities, and responsibilities of the 
     agency; and
       (ii) the office establishes and implements procedures and 
     protocols to ensure the confidentiality of all information 
     shared by a participant, beneficiary, or enrollee or their 
     personal representative and their health care providers, 
     group health plans, or health insurance issuers with the 
     office and to ensure that no information is disclosed to the 
     State agency or office without the written authorization of 
     the individual or their personal representative in accordance 
     with paragraph (2).
       (B) Contract entity.--In the case of an entity that enters 
     into a contract with a State under subsection (a)(3), the 
     entity shall provide assurances that the entity has no 
     conflict of interest in carrying out the activities of the 
     office and that the entity is independent of group health 
     plans, health insurance issuers, providers, payers, and 
     regulators of health care.
       (5) Subcontracts.--The health care consumer assistance 
     office of a State may carry out activities and provide 
     services through contracts entered into with 1 or more 
     nonprofit entities so long as the office can demonstrate that 
     all of the requirements of this section are complied with by 
     the office.
       (6) Term.--A contract entered into under this subsection 
     shall be for a term of 3 years.
       (c) Report.--Not later than 1 year after the Secretary 
     first awards grants under this section, and annually 
     thereafter, the Secretary shall prepare and submit to the 
     appropriate committees of Congress a report concerning the 
     activities funded under this section and the effectiveness of 
     such activities in resolving health care-related problems and 
     grievances.
       (d) Authorization of Appropriations.--There are authorized 
     to be appropriated such sums as may be necessary to carry out 
     this section.

                       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 (including physician pathology 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

[[Page H5294]]

     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 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 and a 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.--Subject to subsection (a)(1), 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, including an authorization for a standing 
     referral where appropriate; 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.--Subject to subsection (a)(1), a group 
     health plan and a 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 OBSTETRICAL AND GYNECOLOGICAL 
                   CARE.

       (a) General Rights.--
       (1) Direct access.--A group health plan, and a 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 and a 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

[[Page H5295]]

     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 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.

[[Page H5296]]

     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 (and 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 and 
     a 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.
       (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--
       (A) approved and funded (which may include funding through 
     in-kind contributions) by one or more of the following:
       (i) the National Institutes of Health;
       (ii) a cooperative group or center of the National 
     Institutes of Health, including a qualified nongovernmental 
     research entity to which the National Cancer Institute has 
     awarded a center support grant;
       (iii) either of the following if the conditions described 
     in paragraph (2) are met--

       (I) the Department of Veterans Affairs;
       (II) the Department of Defense; or

       (B) approved by the Food and Drug Administration.
       (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 ethical 
     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;

[[Page H5297]]

       (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(d)(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) Disenrollment.--Information relating to the 
     disenrollment of a participant, beneficiary, or enrollee.
       (4) Service area.--A description of the plan or issuer's 
     service area, including the provision of any out-of-area 
     coverage.
       (5) 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.
       (6) 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.
       (7) Preauthorization requirements.--A description of the 
     requirements and procedures to be used to obtain 
     preauthorization for health services, if such 
     preauthorization is required.
       (8) 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.
       (9) Specialty care.--A description of the requirements and 
     procedures to be used by 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.
       (10) Clinical trials.--A description of 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.
       (11) 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.
       (12) 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.
       (13) 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.
       (14) Advance directives and organ donation.--A description 
     of procedures for advance directives and organ donation 
     decisions if the plan or issuer maintains such procedures.
       (15) 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.
       (16) 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.
       (17) 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.
       (18) Notice of requirements.--A description of any rights 
     of participants, beneficiaries, and enrollees that are 
     established by the Bipartisan Patient Protection Act 
     (excluding those described in paragraphs (1) through (17)) 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.
       (19) 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.
       (20) Designated decisionmakers.--A description of the 
     participants and beneficiaries with respect to whom each 
     designated decisionmaker under the plan has assumed liability 
     under section 502(o) of the Employee Retirement Income 
     Security Act of 1974 and the name and address of each such 
     decisionmaker.

[[Page H5298]]

       (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) Utilization review activities.--A description of 
     procedures used and requirements (including circumstances, 
     timeframes, and appeals rights) under any utilization review 
     program under sections 101 and 102, including any drug 
     formulary program under section 118.
       (5) 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 a 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 1852(j)(4) 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.
       (b) Application.--For purposes of carrying out paragraph 
     (1), any reference in section 1852(j)(4) of the Social 
     Security Act to the Secretary, a Medicare+Choice 
     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 
     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 that is no less protective than 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 and a 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.--

[[Page H5299]]

       (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 714 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.
       (2) 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.
       (3) 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.
       (4) 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.
       (5) 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.
       (6) 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.
       (7) Nonparticipating.--The term ``nonparticipating'' means, 
     with respect to a health care provider that provides health 
     care items and services to a participant, beneficiary, or 
     enrollee under group health plan or health insurance 
     coverage, a health care provider that is not a participating 
     health care provider with respect to such items and services.
       (8) 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.
       (9) 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.
       (10) 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 Compliant 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 
     substantially complies (within the meaning of subsection (c)) 
     with 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 compliant 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) Definitions.--In this section:
       (A) Patient protection requirement.--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.
       (B) Substantially compliant.--The terms ``substantially 
     compliant'', substantially complies'', or ``substantial 
     compliance'' with respect to a State law, mean that the State 
     law has the same or similar features as the patient 
     protection requirements and has a similar effect.

[[Page H5300]]

       (c) Determinations of Substantial Compliance.--
       (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 compliant 
     with 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 substantially 
     complies with 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 substantially 
     comply with 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.
       (C) Deference to states.--With respect to a certification 
     submitted under paragraph (1), the Secretary shall give 
     deference to the State's interpretation of the State law 
     involved with respect to the patient protection involved.
       (D) Public notification.--The Secretary shall--
       (i) provide a State with a notice of the determination to 
     approve or disapprove a certification under this paragraph;
       (ii) promptly publish in the Federal Register a notice that 
     a State has submitted a certification under paragraph (1);
       (iii) promptly publish in the Federal Register the notice 
     described in clause (i) with respect to the State; and
       (iv) annually publish the status of all States with respect 
     to certifications.
       (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 
     compliance.
       (5) Petitions.--
       (A) Petition process.--Effective on the date on which the 
     provisions of this Act become effective, as provided for in 
     section 601, a group health plan, health insurance issuer, 
     participant, beneficiary, or enrollee may submit a petition 
     to the Secretary for an advisory opinion as to whether or not 
     a standard or requirement under a State law applicable to the 
     plan, issuer, participant, beneficiary, or enrollee that is 
     not the subject of a certification under this subsection, is 
     superseded under subsection (a)(1) because such standard or 
     requirement prevents the application of a requirement of this 
     title.
       (B) Opinion.--The Secretary shall issue an advisory opinion 
     with respect to a petition submitted under subparagraph (A) 
     within the 60-day period beginning on the date on which such 
     petition is submitted.
       (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. TREATMENT OF EXCEPTED BENEFITS.

       (a) In General.--The requirements of this title and the 
     provisions of sections 502(a)(1)(C), 502(n), and 514(d) of 
     the Employee Retirement Income Security Act of 1974 (added by 
     section 402) shall not apply to excepted benefits (as defined 
     in section 733(c) of such Act), other than benefits described 
     in section 733(c)(2)(A) of such Act, in the same manner as 
     the provisions of part 7 of subtitle B of title I of such Act 
     do not apply to such benefits under subsections (b) and (c) 
     of section 732 of such Act.
       (b) Coverage of Certain Limited Scope Plans.--Only for 
     purposes of applying the requirements of this title under 
     sections 2707 and 2753 of the Public Health Service Act, 
     section 714 of the Employee Retirement Income Security Act of 
     1974, and section 9813 of the Internal Revenue Code of 1986, 
     the following sections shall be deemed not to apply:
       (1) Section 2791(c)(2)(A) of the Public Health Service Act.
       (2) Section 733(c)(2)(A) of the Employee Retirement Income 
     Security Act of 1974.
       (3) Section 9832(c)(2)(A) of the Internal Revenue Code of 
     1986.

     SEC. 155. REGULATIONS.

       The Secretaries of Health and Human Services, Labor, and 
     the Treasury shall issue such regulations as may be necessary 
     or appropriate to carry out this 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, subject to 
     section 154, 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.

     SEC. 157. PRESERVATION OF PROTECTIONS.

       (a) In General.--The rights under this Act (including the 
     right to maintain a civil action and any other rights under 
     the amendments made by this Act) may not be waived, deferred, 
     or lost pursuant to any agreement not authorized under this 
     Act.
       (b) Exception.--Subsection (a) shall not apply to an 
     agreement providing for arbitration or participation in any 
     other nonjudicial procedure to resolve a dispute if the 
     agreement is entered into knowingly and voluntarily by the 
     parties involved after the dispute has arisen or is pursuant 
     to the terms of a collective bargaining agreement. Nothing in 
     this subsection shall be construed to permit the waiver of 
     the requirements of sections 103 and 104 (relating to 
     internal and external review).

 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, 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 with respect to individual health

[[Page H5301]]

     insurance coverage it offers, and such requirements shall be 
     deemed to be incorporated into this subsection.''.

     SEC. 203. COOPERATION BETWEEN FEDERAL AND STATE AUTHORITIES.

       Part C of title XXVII of the Public Health Service Act (42 
     U.S.C. 300gg-91 et seq.) is amended by adding at the end the 
     following:

     ``SEC. 2793. COOPERATION BETWEEN FEDERAL AND STATE 
                   AUTHORITIES.

       ``(a) Agreement with States.--A State may enter into an 
     agreement with the Secretary for the delegation to the State 
     of some or all of the Secretary's authority under this title 
     to enforce the requirements applicable under title I of the 
     Bipartisan Patient Protection Act 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.
       ``(b) Delegations.--Any department, agency, or 
     instrumentality of a State to which authority is delegated 
     pursuant to an agreement entered into under this section may, 
     if authorized under State law and to the extent consistent 
     with such agreement, exercise the powers of the Secretary 
     under this title which relate to such authority.''.

   TITLE III--APPLICATION OF PATIENT PROTECTION STANDARDS TO FEDERAL 
                       HEALTH INSURANCE PROGRAMS

     SEC. 301. APPLICATION OF PATIENT PROTECTION STANDARDS TO 
                   FEDERAL HEALTH INSURANCE PROGRAMS.

       (a) Sense of Congress.--It is the sense of Congress that 
     enrollees in Federal health insurance programs should have 
     the same rights and privileges as those afforded under title 
     I and under the amendments made by title IV to participants 
     and beneficiaries under group health plans.
       (b) Conforming Federal Health Insurance Programs.--It is 
     the sense of Congress that the President should require, by 
     executive order, the Federal official with authority over 
     each Federal health insurance program, to the extent 
     feasible, to take such steps as are necessary to implement 
     the rights and privileges described in subsection (a) with 
     respect to such program.
       (c) GAO Report on Additional Steps Required.--Not later 
     than 1 year after the date of the enactment of this Act, the 
     Comptroller General of the United States shall submit to 
     Congress a report on statutory changes that are required to 
     implement such rights and privileges in a manner that is 
     consistent with the missions of the Federal health insurance 
     programs and that avoids unnecessary duplication or 
     disruption of such programs.
       (d) Federal Health Insurance Program.--In this section, the 
     term ``Federal health insurance program'' means a Federal 
     program that provides creditable coverage (as defined in 
     section 2701(c)(1) of the Public Health Service Act) and 
     includes a health program of the Department of Veterans 
     Affairs.

TITLE IV--AMENDMENTS TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 
                                  1974

     SEC. 401. 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 (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 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, 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, 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 compliant state laws.--For 
     purposes of applying this subsection in connection with 
     health insurance coverage, any reference in this subsection 
     to a requirement in a section or other provision in the 
     Bipartisan Patient Protection Act with respect to a health 
     insurance issuer is deemed to include a reference to a 
     requirement under a State law that substantially complies (as 
     determined under section 152(c) of such Act) with 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, 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 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 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:

[[Page H5302]]

       ``(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, 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. 402. 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 subsections:
       ``(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, upon consideration of a claim for benefits of a 
     participant or beneficiary under section 102 of the 
     Bipartisan Patient Protection Act (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--
       ``(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, and
       ``(B) such failure is a proximate cause of personal injury 
     to, or the death of, the participant or beneficiary,

     such plan, plan sponsor, or issuer 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 
     paragraph (1)(A) does not include a medically reviewable 
     decision.
       ``(B) Medically reviewable decision.--For purposes of this 
     subsection, 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 (relating to medically reviewable decisions).
       ``(3) Limitation regarding certain types of actions saved 
     from preemption of state law.--A cause of action is not 
     established under paragraph (1)(A) in connection with a 
     failure described in paragraph (1)(A) to the extent that a 
     cause of action under State law (as defined in section 
     514(c)) for such failure would not be preempted under section 
     514.
       ``(4) Definitions and related rules.--For purposes of this 
     subsection.--
       ``(A) Ordinary care.--The term `ordinary care' means, 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 
     claims involved.
       ``(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.
       ``(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.
       ``(E) Treatment of excepted benefits.--Under section 154(a) 
     of the Bipartisan Patient Protection Act, the provisions of 
     this subsection and subsection (a)(1)(C) do not apply to 
     certain excepted benefits.
       ``(5) 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) under 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 upon consideration 
     of a claim for benefits or under section 103 of such Act upon 
     review of a denial of a claim for benefits.
       ``(C) Direct participation.--
       ``(i) In general.--For purposes of subparagraph (B), the 
     term `direct participation' means, in connection with a 
     decision described in paragraph (1)(A), the actual making of 
     such decision or the actual exercise of control in making 
     such decision.
       ``(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 
     paragraph (1)(A) on a particular claim for benefits of a 
     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.

       ``(iii) 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).

       ``(D) Application to certain plans.--
       ``(i) In general.--Notwithstanding any other provision of 
     this subsection, no group health plan described in clause 
     (ii) (or plan sponsor of such a plan) shall be liable under 
     paragraph (1) for the performance of, or the failure to 
     perform, any non-medically reviewable duty under the plan.
       ``(ii) Definition.--A group health plan described in this 
     clause is--

       ``(I) a group health plan that is self-insured and self 
     administered by an employer (including an employee of such an 
     employer acting within the scope of employment); or
       ``(II) a multiemployer plan as defined in section 3(37)(A) 
     (including an employee of a contributing employer or of the 
     plan, or a fiduciary of the plan, acting within the scope of 
     employment or fiduciary responsibility) that is self-insured 
     and self-administered.

       ``(6) Exclusion of physicians and other health care 
     professionals.--
       ``(A) In general.--No treating physician or other treating 
     health care professional of the participant or beneficiary, 
     and no person acting under the direction of such a physician 
     or health care professional, shall be liable under paragraph 
     (1) for the performance of, or the failure to perform, any 
     non-medically reviewable duty of the plan, the plan sponsor, 
     or any health insurance issuer offering health insurance 
     coverage in connection with the plan.
       ``(B) Definitions.--For purposes of subparagraph (A)--
       ``(i) 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.
       ``(ii) Non-medically reviewable duty.--The term `non-
     medically reviewable duty' means a duty the discharge of 
     which does not include the making of a medically reviewable 
     decision.
       ``(7) Exclusion of hospitals.--No treating hospital of the 
     participant or beneficiary shall be liable under paragraph 
     (1) for the performance of, or the failure to perform, any 
     non-medically reviewable duty (as defined in paragraph 
     (6)(B)(ii)) of the plan, the plan sponsor, or any health 
     insurance issuer offering health insurance coverage in 
     connection with the plan.
       ``(8) Rule of construction relating to exclusion from 
     liability of physicians,

[[Page H5303]]

     health care professionals, and hospitals.--Nothing in 
     paragraph (6) or (7) shall be construed to limit the 
     liability (whether direct or vicarious) of the plan, the plan 
     sponsor, or any health insurance issuer offering health 
     insurance coverage in connection with the plan.
       ``(9) Requirement of exhaustion.--
       ``(A) In general.--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 (if applicable) have been exhausted.
       ``(B) Exception for needed care.--A participant or 
     beneficiary may seek relief exclusively in Federal court 
     under subsection 502(a)(1)(B) prior to the exhaustion of 
     administrative remedies under sections 102, 103, or 104 of 
     the Bipartisan Patient Protection Act (as required under 
     subparagraph (A)) if it is demonstrated to the court that the 
     exhaustion of such remedies would cause irreparable harm to 
     the health of the participant or beneficiary. Notwithstanding 
     the awarding of relief under subsection 502(a)(1)(B) pursuant 
     to this subparagraph, no relief shall be available as a 
     result of, or arising under, paragraph (1)(A) or paragraph 
     (10)(B), with respect to a participant or beneficiary, unless 
     the requirements of subparagraph (A) are met.
       ``(C) 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.
       ``(D) Admissible.--Any determination made by a reviewer in 
     an administrative proceeding under section 103 of the 
     Bipartisan Patient Protection Act shall be admissible in any 
     Federal court proceeding and shall be presented to the trier 
     of fact.
       ``(10) 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.
       ``(11) Limitation on attorneys' fees.--
       ``(A) In general.--Notwithstanding any other provision of 
     law, or any arrangement, agreement, or contract regarding an 
     attorney's fee, the amount of an attorney's contingency fee 
     allowable for a cause of action brought pursuant to this 
     subsection shall not exceed \1/3\ of the total amount of the 
     plaintiff's recovery (not including the reimbursement of 
     actual out-of-pocket expenses of the attorney).
       ``(B) Determination by district court.--The last Federal 
     district court in which the action was pending upon the final 
     disposition, including all appeals, of the action shall have 
     jurisdiction to review the attorney's fee to ensure that the 
     fee is a reasonable one.
       ``(12) 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 
     (9) are first met.
       ``(13) 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.
       ``(14) 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.
       ``(15) 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 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.
       ``(16) Exclusion of health insurance agents.--Paragraph (1) 
     does not apply with respect to a person whose sole 
     involvement with the group health plan is providing advice or 
     administrative services to the employer or other plan sponsor 
     relating to the selection of health insurance coverage 
     offered in connection with the plan.
       ``(17) 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.
       ``(18) Relief from liability for employer or other plan 
     sponsor by means of designated decisionmaker.--
       ``(A) In general.--Notwithstanding the direct participation 
     (as defined in paragraph (5)(C)(i)) of an employer or plan 
     sponsor, in any case in which there is (or is deemed under 
     subparagraph (B) to be) a designated decisionmaker that meets 
     the requirements of subsection (o)(1) for an employer or 
     other plan sponsor--
       ``(i) all liability of such employer or plan sponsor 
     involved (and any employee of such employer or sponsor acting 
     within the scope of employment) under this subsection in 
     connection with any participant or beneficiary shall be 
     transferred to, and assumed by, the designated decisionmaker, 
     and
       ``(ii) with respect to such liability, the designated 
     decisionmaker shall be substituted for the employer or 
     sponsor (or employee) in the action and may not raise any 
     defense that the employer or sponsor (or employee) could not 
     raise if such a decisionmaker were not so deemed.
       ``(B) Automatic designation.--A health insurance issuer 
     shall be deemed to be a designated decisionmaker for purposes 
     of subparagraph (A) with respect to the participants and 
     beneficiaries of an employer or plan sponsor, whether or not 
     the employer or plan sponsor makes such a designation, and 
     shall be deemed to have assumed unconditionally all liability 
     of the employer or plan sponsor under such designation in 
     accordance with subsection (o), unless the employer or plan 
     sponsor affirmatively enters into a contract to prevent the 
     service of the designated decisionmaker.
       ``(C) Treatment of certain trust funds.--For purposes of 
     this paragraph, the terms `employer' and `plan sponsor', in 
     connection with the assumption by a designated decisionmaker 
     of the liability of employer or other plan sponsor pursuant 
     to this paragraph, shall be construed to include a trust fund 
     maintained pursuant to section 302 of the Labor Management 
     Relations Act, 1947 (29 U.S.C. 186) or the Railway Labor Act 
     (45 U.S.C. 151 et seq.).
       ``(19) Previously provided services.--
       ``(A) in general.--Except as provided in this paragraph, a 
     cause of action shall not arise under paragraph (1) where the 
     denial involved relates to an item or service that has 
     already been fully provided to the participant or beneficiary 
     under the plan or coverage and the claim relates solely to 
     the subsequent denial of payment for the provision of such 
     item or service.
       ``(B) Exception.--Nothing in subparagraph (A) shall be 
     construed to--
       ``(i) prohibit a cause of action under paragraph (1) where 
     the nonpayment involved results in the participant or 
     beneficiary being unable to receive further items or services 
     that are directly related to the item or service involved in 
     the denial referred to in subparagraph (A) or that are part 
     of a continuing treatment or series of procedures; or
       ``(ii) limit liability that otherwise would arise from the 
     provision of the item or services or the performance of a 
     medical procedure.
       ``(20) Exemption from personal liability for individual 
     members of boards of directors, joint boards of trustees, 
     etc.--Any individual who is--
       ``(A) a member of a board of directors of an employer or 
     plan sponsor; or
       ``(B) a member of an association, committee, employee 
     organization, joint board of trustees, or other similar group 
     of representatives of the entities that are the plan sponsor 
     of plan maintained by two or more employers and one or more 
     employee organizations;

     shall not be personally liable under this subsection for 
     conduct that is within the scope of employment or of plan-
     related duties of the individuals unless the individual acts 
     in a fraudulent manner for personal enrichment.
       ``(o) Requirements for Designated Decisionmakers of Group 
     Health Plans.--

[[Page H5304]]

       ``(1) In general.--For purposes of subsection (n)(18) and 
     section 514(d)(9), a designated decisionmaker meets the 
     requirements of this paragraph with respect to any 
     participant or beneficiary if--
       ``(A) such designation is in such form as may be prescribed 
     in regulations of the Secretary,
       ``(B) the designated decisionmaker--
       ``(i) meets the requirements of paragraph (2),
       ``(ii) assumes unconditionally all liability of the 
     employer or plan sponsor involved (and any employee of such 
     employer or sponsor acting within the scope of employment) 
     either arising under subsection (n) or arising in a cause of 
     action permitted under section 514(d) in connection with 
     actions (and failures to act) of the employer or plan sponsor 
     (or employee) occurring during the period in which the 
     designation under subsection (n)(18) or section 514(d)(9) is 
     in effect relating to such participant and beneficiary,
       ``(iii) agrees to be substituted for the employer or plan 
     sponsor (or employee) in the action and not to raise any 
     defense with respect to such liability that the employer or 
     plan sponsor (or employee) may not raise, and
       ``(iv) where paragraph (2)(B) applies, assumes 
     unconditionally the exclusive authority under the group 
     health plan to make medically reviewable decisions under the 
     plan with respect to such participant or beneficiary, and
       ``(C) the designated decisionmaker and the participants and 
     beneficiaries for whom the decisionmaker has assumed 
     liability are identified in the written instrument required 
     under section 402(a) and as required under section 121(b)(19) 
     of the Bipartisan Patient Protection Act.

     Any liability assumed by a designated decisionmaker pursuant 
     to this subsection shall be in addition to any liability that 
     it may otherwise have under applicable law.
       ``(2) Qualifications for designated decisionmakers.--
       ``(A) In general.--Subject to subparagraph (B), an entity 
     is qualified under this paragraph to serve as a designated 
     decisionmaker with respect to a group health plan if the 
     entity has the ability to assume the liability described in 
     paragraph (1) with respect to participants and beneficiaries 
     under such plan, including requirements relating to the 
     financial obligation for timely satisfying the assumed 
     liability, and maintains with the plan sponsor and the 
     Secretary certification of such ability. Such certification 
     shall be provided to the plan sponsor or named fiduciary and 
     to the Secretary upon designation under subsection (n)(18)(B) 
     or section 517(d)(9)(B) and not less frequently than annually 
     thereafter, or if such designation constitutes a multiyear 
     arrangement, in conjunction with the renewal of the 
     arrangement.
       ``(B) Special qualification in the case of certain 
     reviewable decisions.--In the case of a group health plan 
     that provides benefits consisting of medical care to a 
     participant or beneficiary only through health insurance 
     coverage offered by a single health insurance issue, such 
     issuer is the only entity that may be qualified under this 
     paragraph to serve as a designated decisionmaker with respect 
     to such participant or beneficiary, and shall serve as the 
     designated decisionmaker unless the employer or other plan 
     sponsor acts affirmatively to prevent such service.
       ``(3) Requirements relating to financial obligations.--For 
     purposes of paragraph (2)(A), the requirements relating to 
     the financial obligation of an entity for liability shall 
     include--
       ``(A) coverage of such entity under an insurance policy or 
     other arrangement, secured and maintained by such entity, to 
     effectively insure such entity against losses arising from 
     professional liability claims, including those arising from 
     its service as a designated decisionmaker under this part; or
       ``(B) evidence of minimum capital and surplus levels that 
     are maintained by such entity to cover any losses as a result 
     of liability arising from its service as a designated 
     decisionmaker under this part.

     The appropriate amounts of liability insurance and minimum 
     capital and surplus levels for purposes of subparagraphs (A) 
     and (B) shall be determined by an actuary using sound 
     actuarial principles and accounting practices pursuant to 
     established guidelines of the American Academy of Actuaries 
     and in accordance with such regulations as the Secretary may 
     prescribe and shall be maintained throughout the term for 
     which the designation is in effect. The provisions of this 
     paragraph shall not apply in the case of a designated 
     decisionmaker that is a group health plan, plan sponsor, or 
     health insurance issuer and that is regulated under Federal 
     law or a State financial solvency law.
       ``(4) Limitation on appointment of treating physicians.--A 
     treating physician who directly delivered the care, 
     treatment, or provided the patient service that is the 
     subject of a cause of action by a participant or beneficiary 
     under subsection (n) or section 514(d) may not be designated 
     as a designated decisionmaker under this subsection with 
     respect to such participant or beneficiary.''.
       (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) against the 
     plan, the plan sponsor, any health insurance issuer offering 
     health insurance coverage in connection with the plan, or any 
     managed care entity in connection with the plan to recover 
     damages resulting from personal injury or for wrongful death 
     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 (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 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.
       ``(2) Definitions and related rules.--For purposes of this 
     subsection and subsection (e)--
       ``(A) Treatment of excepted benefits.--Under section 154(a) 
     of the Bipartisan Patient Protection Act, the provisions of 
     this subsection do not apply to certain excepted benefits.
       ``(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.
       ``(D) Managed care entity.--
       ``(i) In general.--The term `managed care entity' means, in 
     connection with a group health plan and subject to clause 
     (ii), any entity that is involved in determining the manner 
     in which or the extent to which items or services (or 
     reimbursement therefor) are to be provided as benefits under 
     the plan.
       ``(ii) Treatment of treating physicians, other treating 
     health care professionals, and treating hospitals.--Such term 
     does not include a treating physician or other treating 
     health care professional (as defined in section 
     502(n)(6)(B)(i)) of the participant or beneficiary and also 
     does not include a treating hospital insofar as it is acting 
     solely in the capacity of providing treatment or care to the 
     participant or beneficiary. Nothing in the preceding sentence 
     shall be construed to preempt vicarious liability of any 
     plan, plan sponsor, health insurance issuer, or managed care 
     entity.
       ``(3) 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

[[Page H5305]]

     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 that is brought by 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 
     employer or other plan sponsor maintaining the plan (or 
     against an employee of such an employer or sponsor acting 
     within the scope of employment) if such cause of action 
     arises by reason of a medically reviewable decision, to the 
     extent that there was direct participation by the employer or 
     other plan sponsor (or employee) in the decision.
       ``(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), 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) on a particular claim for benefits of 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).

       ``(4) Requirement of exhaustion.--
       ``(A) In general.--Except as provided in subparagraph (D), 
     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, 103, and 104 of the Bipartisan Patient Protection Act 
     (if applicable) have been exhausted.
       ``(B) Late manifestation of injury.--
       ``(i) In general.--A participant or beneficiary shall not 
     be precluded from pursuing a review under section 104 of the 
     Bipartisan Patient Protection Act regarding an injury that 
     such participant or beneficiary has experienced if the 
     external review entity first determines that the injury of 
     such participant or beneficiary is a late manifestation of an 
     earlier injury.
       ``(ii) Definition.--In this subparagraph, the term `late 
     manifestation of an earlier injury' means an injury sustained 
     by the participant or beneficiary which was not known, and 
     should not have been known, by such participant or 
     beneficiary by the latest date that the requirements of 
     subparagraph (A) should have been met regarding the claim for 
     benefits which was denied.
       ``(C) Exception for needed care.--A participant or 
     beneficiary may seek relief exclusively in Federal court 
     under subsection 502(a)(1)(B) prior to the exhaustion of 
     administrative remedies under sections 102, 103, or 104 of 
     the Bipartisan Patient Protection Act (as required under 
     subparagraph (A)) if it is demonstrated to the court that the 
     exhaustion of such remedies would cause irreparable harm to 
     the health of the participant or beneficiary. Notwithstanding 
     the awarding of relief under subsection 502(a)(1)(B) pursuant 
     to this subparagraph, no relief shall be available as a 
     result of, or arising under, paragraph (1)(A) unless the 
     requirements of subparagraph (A) are met.
       ``(D) Failure to review.--
       ``(i) In general.--If the external review entity fails to 
     make a determination within the time required under section 
     104(e)(1)(A)(i), a participant or beneficiary may bring an 
     action under section 514(d) after 10 additional days after 
     the date on which such time period has expired and the filing 
     of such action shall not affect the duty of the independent 
     medical reviewer (or reviewers) to make a determination 
     pursuant to section 104(e)(1)(A)(i).
       ``(ii) Expedited determination.--If the external review 
     entity fails to make a determination within the time required 
     under section 104(e)(1)(A)(ii), a participant or beneficiary 
     may bring an action under this subsection and the filing of 
     such an action shall not affect the duty of the independent 
     medical reviewer (or reviewers) to make a determination 
     pursuant to section 104(e)(1)(A)(ii).
       ``(E) 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.
       ``(F) Admissible.--Any determination made by a reviewer in 
     an administrative proceeding under section 104 of the 
     Bipartisan Patient Protection Act shall be admissible in any 
     Federal or State court proceeding and shall be presented to 
     the trier of fact.
       ``(5) 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.
       ``(6) 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 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.
       ``(7) 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, 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).
       ``(8) 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).
       ``(9) Relief from liability for employer or other plan 
     sponsor by means of designated decisionmaker.--
       ``(A) In general.--Paragraph (1) shall not apply with 
     respect to any cause of action described in paragraph (1)(A) 
     under State law insofar as such cause of action provides for 
     liability with respect to a participant or beneficiary of an 
     employer or plan sponsor (or an employee of such employer or 
     sponsor acting within the scope of employment), if with 
     respect to the employer or plan sponsor there is (or is 
     deemed under subparagraph (B) to be) a designated 
     decisionmaker that meets the requirements of section 
     502(o)(1) with respect to such participant or beneficiary. 
     Such paragraph (1) shall apply with respect to any cause of 
     action described in paragraph (1)(A) under State law against 
     the designated decisionmaker of such employer or other plan 
     sponsor with respect to the participant or beneficiary.
       ``(B) Automatic designation.--A health insurance issuer 
     shall be deemed to be a designated decisionmaker for purposes 
     of subparagraph (A) with respect to the participants and 
     beneficiaries of an employer or plan sponsor, whether or not 
     the employer or plan sponsor makes such a designation, and

[[Page H5306]]

     shall be deemed to have assumed unconditionally all liability 
     of the employer or plan sponsor under such designation in 
     accordance with subsection (o), unless the employer or plan 
     sponsor affirmatively enters into a contract to prevent the 
     service of the designated decisionmaker.
       ``(C) Treatment of certain trust funds.--For purposes of 
     this paragraph, the terms `employer' and `plan sponsor', in 
     connection with the assumption by a designated decisionmaker 
     of the liability of employer or other plan sponsor pursuant 
     to this paragraph, shall be construed to include a trust fund 
     maintained pursuant to section 302 of the Labor Management 
     Relations Act, 1947 (29 U.S.C. 186) or the Railway Labor Act 
     (45 U.S.C. 151 et seq.).
       ``(10) Previously provided services.--
       ``(A) In general.--Except as provided in this paragraph, a 
     cause of action shall not arise under paragraph (1) where the 
     denial involved relates to an item or service that has 
     already been fully provided to the participant or beneficiary 
     under the plan or coverage and the claim relates solely to 
     the subsequent denial of payment for the provision of such 
     item or service.
       ``(B) Exception.--Nothing in subparagraph (A) shall be 
     construed to--
       ``(i) prohibit a cause of action under paragraph (1) where 
     the nonpayment involved results in the participant or 
     beneficiary being unable to receive further items or services 
     that are directly related to the item or service involved in 
     the denial referred to in subparagraph (A) or that are part 
     of a continuing treatment or series of procedures;
       ``(ii) prohibit a cause of action under paragraph (1) 
     relating to quality of care; or
       ``(iii) limit liability that otherwise would arise from the 
     provision of the item or services or the performance of a 
     medical procedure.
       ``(11) Exemption from personal liability for individual 
     members of boards of directors, joint boards of trustees, 
     etc.--Any individual who is--
       ``(A) a member of a board of directors of an employer or 
     plan sponsor; or
       ``(B) a member of an association, committee, employee 
     organization, joint board of trustees, or other similar group 
     of representatives of the entities that are the plan sponsor 
     of plan maintained by two or more employers and one or more 
     employee organizations;

     shall not be personally liable under this subsection for 
     conduct that is within the scope of employment or of plan-
     related duties of the individuals unless the individual acts 
     in a fraudulent manner for personal enrichment.
       ``(12) Choice of law.--A cause of action brought under 
     paragraph (1) shall be governed by the law (including choice 
     of law rules) of the State in which the plaintiff resides.
       ``(13) Limitation on attorneys' fees.--
       ``(A) In general.--Notwithstanding any other provision of 
     law, or any arrangement, agreement, or contract regarding an 
     attorney's fee, the amount of an attorney's contingency fee 
     allowable for a cause of action brought under paragraph (1) 
     shall not exceed \1/3\ of the total amount of the plaintiff's 
     recovery (not including the reimbursement of actual out-of-
     pocket expenses of the attorney).
       ``(B) Determination by court.--The last court in which the 
     action was pending upon the final disposition, including all 
     appeals, of the action may review the attorney's fee to 
     ensure that the fee is a reasonable one.
       ``(C) No preemption of state law.--Subparagraph (A) shall 
     not apply with respect to a cause of action under paragraph 
     (1) that is brought in a State that has a law or framework of 
     laws with respect to the amount of an attorney's contingency 
     fee that may be incurred for the representation of a 
     participant or beneficiary (or the estate of such participant 
     or beneficiary) who brings such a cause of action.
       ``(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, or the failure to provide, 
     medical care, or affecting any action (whether the liability 
     is direct or vicarious) based upon such a State law,
       ``(2) superseding any State law permitted under section 
     152(b)(1)(A) of the Bipartisan Patient Protection Act, or
       ``(3) affecting any applicable State law with respect to 
     limitations on monetary damages.
       ``(f) No Right of Action for Recovery, Indemnity, or 
     Contribution by Issuers Against Treating Health Care 
     Professionals and Treating Hospitals.--In the case of any 
     care provided, or any treatment decision made, by the 
     treating health care professional or the treating hospital of 
     a participant or beneficiary under a group health plan which 
     consists of medical care provided under such plan, any cause 
     of action under State law against the treating health care 
     professional or the treating hospital by the plan or a health 
     insurance issuer providing health insurance coverage in 
     connection with the plan for recovery, indemnity, or 
     contribution in connection with such care (or any medically 
     reviewable decision made in connection with such care) or 
     such treatment decision is superseded.''.
       (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 applicable effective 
     under section 601.

     SEC. 403. LIMITATION ON CERTAIN CLASS ACTION LITIGATION.

       Section 502 of the Employee Retirement Income Security Act 
     of 1974 (29 U.S.C. 1132), as amended by section 402, is 
     further amended by adding at the end the following:
       ``(p) Limitation on Class Action Litigation.--
       ``(1) In general.--Any claim or cause of action that is 
     maintained under this section in connection with a group 
     health plan, or health insurance coverage issued in 
     connection with a group health plan, as a class action, 
     derivative action, or as an action on behalf of any group of 
     2 or more claimants, may be maintained only if the class, the 
     derivative claimant, or the group of claimants is limited to 
     the participants or beneficiaries of a group health plan 
     established by only 1 plan sponsor. No action maintained by 
     such class, such derivative claimant, or such group of 
     claimants may be joined in the same proceeding with any 
     action maintained by another class, derivative claimant, or 
     group of claimants or consolidated for any purpose with any 
     other proceeding. In this paragraph, the terms `group health 
     plan' and `health insurance coverage' have the meanings given 
     such terms in section 733.
       ``(2) Effective date.--This subsection shall apply to all 
     civil actions that are filed on or after January 1, 2002.''.

     SEC. 404. LIMITATIONS ON ACTIONS.

       Section 502 of the Employee Retirement Income Security Act 
     of 1974 (29 U.S.C. 1132) (as amended by section 402(a)) is 
     amended further by adding at the end the following new 
     subsection:
       ``(q) 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 (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 (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.''.

     SEC. 405. COOPERATION BETWEEN FEDERAL AND STATE AUTHORITIES.

       Subpart C of part 7 of subtitle B of title I of the 
     Employee Retirement Income Security Act of 1974 (29 U.S.C. 
     1191 et seq.) is amended by adding at the end the following 
     new section:

     ``SEC. 735. COOPERATION BETWEEN FEDERAL AND STATE 
                   AUTHORITIES.

       ``(a) Agreement with States.--A State may enter into an 
     agreement with the Secretary for the delegation to the State 
     of some or all of the Secretary's authority under this title 
     to enforce the requirements applicable under title I of the 
     Bipartisan Patient Protection Act 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.
       ``(b) Delegations.--Any department, agency, or 
     instrumentality of a State to which authority is delegated 
     pursuant to an agreement entered into under this section may, 
     if authorized under State law and to the extent consistent 
     with such agreement, exercise the powers of the Secretary 
     under this title which relate to such authority.''.

     SEC. 406. SENSE OF THE SENATE CONCERNING THE IMPORTANCE OF 
                   CERTAIN UNPAID SERVICES.

       It is the sense of the Senate that the court should 
     consider the loss of a nonwage earning spouse or parent as an 
     economic loss for the purposes of this section. Furthermore, 
     the court should define the compensation for the loss not as 
     minimum services, but, rather, in terms that fully compensate 
     for the true and whole replacement cost to the family.

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

        Subtitle A--Application of Patient Protection Provisions

     SEC. 501. 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.'';


[[Page H5307]]


     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 (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. 502. 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 501, 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.''.

         Subtitle B--Health Care Coverage Access Tax Incentives

     SEC. 511. 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. 512. 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. 513. 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. 45G. 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 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 (14), 
     by striking the period at the end of paragraph (15) and 
     inserting ``, plus'', and by adding at the end the following:
       ``(16) in the case of a small employer (as defined in 
     section 45G(d)(3)), the health insurance credit determined 
     under section 45G(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:
       ``(11) No carryback of section 45g 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 45G may be 
     carried back to a taxable year ending before the date of the 
     enactment of section 45G.''.
       (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 
     45G for the taxable year which is equal to the amount of the 
     credit determined for such taxable year under section 45G(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:


[[Page H5308]]


``Sec. 45G. 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. 514. 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--
       ``(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. 515. 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 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;

[[Page H5309]]

       (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
       (C) 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.

       TITLE VI--EFFECTIVE DATES; COORDINATION IN IMPLEMENTATION

     SEC. 601. EFFECTIVE DATES.

       (a) Group Health Coverage.--
       (1) In general.--Subject to paragraph (2) and subsection 
     (d), the amendments made by sections 201(a), 401, 403, 501, 
     and 502 (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 October 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 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), 401, 403, 501, and 502 (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 (excluding any 
     extension thereof agreed to after the date of the enactment 
     of this Act); or
       (B) the general effective date;

     but shall apply not later than 1 year after 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 Act 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. 602. COORDINATION IN IMPLEMENTATION.

       The Secretary of Labor and the Secretary of Health and 
     Human Services 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 
     Act (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. 603. 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.

                  TITLE VII--MISCELLANEOUS PROVISIONS

     SEC. 701. NO IMPACT ON SOCIAL SECURITY TRUST FUND.

       (a) In General.--Nothing in this Act (or an amendment made 
     by this Act) shall be construed to alter or amend the Social 
     Security Act (or any regulation promulgated under that Act).
       (b) Transfers.--
       (1) Estimate of secretary.--The Secretary of the Treasury 
     shall annually estimate the impact that the enactment of this 
     Act has on the income and balances of the trust funds 
     established under section 201 of the Social Security Act (42 
     U.S.C. 401).
       (2) Transfer of funds.--If, under paragraph (1), the 
     Secretary of the Treasury estimates that the enactment of 
     this Act has a negative impact on the income and balances of 
     the trust funds established under section 201 of the Social 
     Security Act (42 U.S.C. 401), the Secretary shall transfer, 
     not less frequently than quarterly, from the general revenues 
     of the Federal Government an amount sufficient so as to 
     ensure that the income and balances of such trust funds are 
     not reduced as a result of the enactment of such Act.

     SEC. 702. CUSTOMS USER FEES.

       Section 13031(j)(3) of the Consolidated Omnibus Budget 
     Reconciliation Act of 1985 (19 U.S.C. 58c(j)(3)) is amended 
     by striking ``2003'' and inserting ``2011, except that fees 
     may not be charged under paragraphs (9) and (10) of such 
     subsection after March 31, 2006''.

     SEC. 703. FISCAL YEAR 2002 MEDICARE PAYMENTS.

       Notwithstanding any other provision of law, any letter of 
     credit under part B of title XVIII of the Social Security Act 
     (42 U.S.C. 1395j et seq.) that would otherwise be sent to the 
     Treasury or the Federal Reserve Board on September 30, 2002, 
     by a carrier with a contract under section 1842 of that Act 
     (42 U.S.C. 1395u) shall be sent on October 1, 2002.

     SEC. 704. SENSE OF SENATE WITH RESPECT TO PARTICIPATION IN 
                   CLINICAL TRIALS AND ACCESS TO SPECIALTY CARE.

       (a) Findings.--The Senate finds the following:
       (1) Breast cancer is the most common form of cancer among 
     women, excluding skin cancers.
       (2) During 2001, 182,800 new cases of female invasive 
     breast cancer will be diagnosed, and 40,800 women will die 
     from the disease.
       (3) In addition, 1,400 male breast cancer cases are 
     projected to be diagnosed, and 400 men will die from the 
     disease.
       (4) Breast cancer is the second leading cause of cancer 
     death among all women and the leading cause of cancer death 
     among women between ages 40 and 55.
       (5) This year 8,600 children are expected to be diagnosed 
     with cancer.
       (6) 1,500 children are expected to die from cancer this 
     year.
       (7) There are approximately 333,000 people diagnosed with 
     multiple sclerosis in the United States and 200 more cases 
     are diagnosed each week.
       (8) Parkinson's disease is a progressive disorder of the 
     central nervous system affecting 1,000,000 in the United 
     States.
       (9) An estimated 198,100 men will be diagnosed with 
     prostate cancer this year.
       (10) 31,500 men will die from prostate cancer this year. It 
     is the second leading cause of cancer in men.
       (11) While information obtained from clinical trials is 
     essential to finding cures for diseases, it is still research 
     which carries the risk of fatal results. Future efforts 
     should be taken to protect the health and safety of adults 
     and children who enroll in clinical trials.

[[Page H5310]]

       (12) While employers and health plans should be responsible 
     for covering the routine costs associated with federally 
     approved or funded clinical trials, such employers and health 
     plans should not be held legally responsible for the design, 
     implementation, or outcome of such clinical trials, 
     consistent with any applicable State or Federal liability 
     statutes.
       (b) Sense of the Senate.--It is the sense of the Senate 
     that--
       (1) men and women battling life-threatening, deadly 
     diseases, including advanced breast or ovarian cancer, should 
     have the opportunity to participate in a federally approved 
     or funded clinical trial recommended by their physician;
       (2) an individual should have the opportunity to 
     participate in a federally approved or funded clinical trial 
     recommended by their physician if--
       (A) that individual--
       (i) has a life-threatening or serious illness for which no 
     standard treatment is effective;
       (ii) is eligible to participate in a federally approved or 
     funded clinical trial according to the trial protocol with 
     respect to treatment of the illness;
       (B) that individual's participation in the trial offers 
     meaningful potential for significant clinical benefit for the 
     individual; and
       (C) either--
       (i) the referring physician is a participating health care 
     professional and has concluded that the individual's 
     participation in the trial would be appropriate, based upon 
     the individual meeting the conditions described in 
     subparagraph (A); or
       (ii) the participant, beneficiary, or enrollee provides 
     medical and scientific information establishing that the 
     individual's participation in the trial would be appropriate, 
     based upon the individual meeting the conditions described in 
     subparagraph (A);
       (3) a child with a life-threatening illness, including 
     cancer, should be allowed to participate in a federally 
     approved or funded clinical trial if that participation meets 
     the requirements of paragraph (2);
       (4) a child with a rare cancer should be allowed to go to a 
     cancer center capable of providing high quality care for that 
     disease; and
       (5) a health maintenance organization's decision that an 
     in-network physician without the necessary expertise can 
     provide care for a seriously ill patient, including a woman 
     battling cancer, should be appealable to an independent, 
     impartial body, and that this same right should be available 
     to all Americans in need of access to high quality specialty 
     care.

     SEC. 705. SENSE OF THE SENATE REGARDING FAIR REVIEW PROCESS.

       (a) Findings.--The Senate finds the following:
       (1) A fair, timely, impartial independent external appeals 
     process is essential to any meaningful program of patient 
     protection.
       (2) The independence and objectivity of the review 
     organization and review process must be ensured.
       (3) It is incompatible with a fair and independent appeals 
     process to allow a health maintenance organization to select 
     the review organization that is entrusted with providing a 
     neutral and unbiased medical review.
       (4) The American Arbitration Association and arbitration 
     standards adopted under chapter 44 of title 28, United States 
     Code (28 U.S.C. 651 et seq.) both prohibit, as inherently 
     unfair, the right of one party to a dispute to choose the 
     judge in that dispute.
       (b) Sense of the Senate.--It is the sense of the Senate 
     that--
       (1) every patient who is denied care by a health 
     maintenance organization or other health insurance company 
     should be entitled to a fair, speedy, impartial appeal to a 
     review organization that has not been selected by the health 
     plan;
       (2) the States should be empowered to maintain and develop 
     the appropriate process for selection of the independent 
     external review entity;
       (3) a child battling a rare cancer whose health maintenance 
     organization has denied a covered treatment recommended by 
     its physician should be entitled to a fair and impartial 
     external appeal to a review organization that has not been 
     chosen by the organization or plan that has denied the care; 
     and
       (4) patient protection legislation should not pre-empt 
     existing State laws in States where there already are strong 
     laws in place regarding the selection of independent review 
     organizations.

     SEC. 706. ANNUAL REVIEW.

       (a) In General.--Not later than 24 months after the general 
     effective date referred to in section 601(a)(1), and annually 
     thereafter for each of the succeeding 4 calendar years (or 
     until a repeal is effective under subsection (b)), the 
     Secretary of Health and Human Services shall request that the 
     Institute of Medicine of the National Academy of Sciences 
     prepare and submit to the appropriate committees of Congress 
     a report concerning the impact of this Act, and the 
     amendments made by this Act, on the number of individuals in 
     the United States with health insurance coverage.
       (b) Limitation With Respect to Certain Plans.--If the 
     Secretary, in any report submitted under subsection (a), 
     determines that more than 1,000,000 individuals in the United 
     States have lost their health insurance coverage as a result 
     of the enactment of this Act, as compared to the number of 
     individuals with health insurance coverage in the 12-month 
     period preceding the date of enactment of this Act, section 
     402 of this Act shall be repealed effective on the date that 
     is 12 month after the date on which the report is submitted, 
     and the submission of any further reports under subsection 
     (a) shall not be required.
       (c) Funding.--From funds appropriated to the Department of 
     Health and Human Services for fiscal years 2003 and 2004, the 
     Secretary of Health and Human Services shall provide for such 
     funding as the Secretary determines necessary for the conduct 
     of the study of the National Academy of Sciences under this 
     section.

     SEC. 707. DEFINITION OF BORN-ALIVE INFANT.

       (a) In General.--Chapter 1 of title 1, United States Code, 
     is amended by adding at the end the following:

     ``Sec. 8. `Person', `human being', `child', and `individual' 
       as including born-alive infant

       ``(a) In determining the meaning of any Act of Congress, or 
     of any ruling, regulation, or interpretation of the various 
     administrative bureaus and agencies of the United States, the 
     words `person', `human being', `child', and `individual', 
     shall include every infant member of the species homo sapiens 
     who is born alive at any stage of development.
       ``(b) As used in this section, the term `born alive', with 
     respect to a member of the species homo sapiens, means the 
     complete expulsion or extraction from his or her mother of 
     that member, at any stage of development, who after such 
     expulsion or extraction breathes or has a beating heart, 
     pulsation of the umbilical cord, or definite movement of 
     voluntary muscles, regardless of whether the umbilical cord 
     has been cut, and regardless of whether the expulsion or 
     extraction occurs as a result of natural or induced labor, 
     caesarean section, or induced abortion.
       ``(c) Nothing in this section shall be construed to affirm, 
     deny, expand, or contract any legal status or legal right 
     applicable to any member of the species homo sapiens at any 
     point prior to being born alive as defined in this 
     section.''.
       (b) Clerical Amendment.--The table of sections at the 
     beginning of chapter 1 of title 1, United States Code, is 
     amended by adding at the end the following new item:

``8. `Person', `human being', `child', and `individual' as including 
              born-alive infant.''.

                      TITLE VIII--REVENUE OFFSETS

               Subtitle A--Extension of Custom User Fees

     SEC. 801. FURTHER EXTENSION OF AUTHORITY TO LEVY CUSTOMS USER 
                   FEES.

       Section 13031(j)(3) of the Consolidated Omnibus Budget 
     Reconciliation Act of 1985 (19 U.S.C. 58c(j)(3)), as amended 
     by section 702, is amended by striking ``, except that fees 
     may not be charged under paragraphs (9) and (10) of such 
     subsection after March 31, 2006''.

                   Subtitle B--Tax Shelter Provisions

          PART I--CLARIFICATION OF ECONOMIC SUBSTANCE DOCTRINE

     SEC. 811. CLARIFICATION OF ECONOMIC SUBSTANCE DOCTRINE.

       (a) In General.--Section 7701 of the Internal Revenue Code 
     of 1986 is amended by redesignating subsection (m) as 
     subsection (n) and by inserting after subsection (l) the 
     following new subsection:
       ``(m) Clarification of Economic Substance Doctrine; Etc.--
       ``(1) General rules.--
       ``(A) In general.--In applying the economic substance 
     doctrine, the determination of whether a transaction has 
     economic substance shall be made as provided in this 
     paragraph.
       ``(B) Definition of economic substance.--For purposes of 
     subparagraph (A)--
       ``(i) In general.--A transaction has economic substance 
     only if--

       ``(I) the transaction changes in a meaningful way (apart 
     from Federal income tax effects) the taxpayer's economic 
     position, and
       ``(II) the taxpayer has a substantial nontax purpose for 
     entering into such transaction and the transaction is a 
     reasonable means of accomplishing such purpose.

       ``(ii) Special rule where taxpayer relies on profit 
     potential.--A transaction shall not be treated as having 
     economic substance by reason of having a potential for profit 
     unless--

       ``(I) the present value of the reasonably expected pre-tax 
     profit from the transaction is substantial in relation to the 
     present value of the expected net tax benefits that would be 
     allowed if the transaction were respected, and
       ``(II) the reasonably expected pre-tax profit from the 
     transaction exceeds a risk-free rate of return.

       ``(C) Treatment of fees and foreign taxes.--Fees and other 
     transaction expenses and foreign taxes shall be taken into 
     account as expenses in determining pre-tax profit under 
     subparagraph (B)(ii).
       ``(2) Special rules for transactions with tax-indifferent 
     parties.--
       ``(A) Special rules for financing transactions.--The form 
     of a transaction which is in substance the borrowing of money 
     or the acquisition of financial capital directly or 
     indirectly from a tax-indifferent party shall not be 
     respected if the present value of the deductions to be 
     claimed with respect to the transaction are substantially in 
     excess of the present value of the anticipated economic 
     returns of the person lending the money or providing the 
     financial capital. A public offering shall be treated as a 
     borrowing, or an acquisition of financial capital, from a 
     tax-indifferent party if it is reasonably expected that at 
     least 50 percent of the offering will be placed with tax-
     indifferent parties.

[[Page H5311]]

       ``(B) Artificial income shifting and basis adjustments.--
     The form of a transaction with a tax-indifferent party shall 
     not be respected if--
       ``(i) it results in an allocation of income or gain to the 
     tax-indifferent party in excess of such party's economic 
     income or gain, or
       ``(ii) it results in a basis adjustment or shifting of 
     basis on account of overstating the income or gain of the 
     tax-indifferent party.
       ``(3) Definitions and special rules.--For purposes of this 
     subsection--
       ``(A) Economic substance doctrine.--The term `economic 
     substance doctrine' means the common law doctrine under which 
     tax benefits under subtitle A with respect to a transaction 
     are not allowable if the transaction does not have economic 
     substance or lacks a business purpose.
       ``(B) Tax-indifferent party.--The term `tax-indifferent 
     party' means any person or entity not subject to tax imposed 
     by subtitle A. A person shall be treated as a tax-indifferent 
     party with respect to a transaction if the items taken into 
     account with respect to the transaction have no substantial 
     impact on such person's liability under subtitle A.
       ``(C) Exception for personal transactions of individuals.--
     In the case of an individual, this subsection shall apply 
     only to transactions entered into in connection with a trade 
     or business or an activity engaged in for the production of 
     income.
       ``(D) Treatment of lessors.--In applying subclause (I) of 
     paragraph (1)(B)(ii) to the lessor of tangible property 
     subject to a lease, the expected net tax benefits shall not 
     include the benefits of depreciation, or any tax credit, with 
     respect to the leased property and subclause (II) of 
     paragraph (1)(B)(ii) shall be disregarded in determining 
     whether any of such benefits are allowable.
       ``(4) Other common law doctrines not affected.--Except as 
     specifically provided in this subsection, the provisions of 
     this subsection shall not be construed as altering or 
     supplanting any other rule of law referred to in section 
     6662(i)(2), and the requirements of this subsection shall be 
     construed as being in addition to any such other rule of 
     law.''
       (b) Effective Date.--The amendments made by this section 
     shall apply to transactions after the date of the enactment 
     of this Act.

                           PART II--PENALTIES

     SEC. 821. INCREASE IN PENALTY ON UNDERPAYMENTS RESULTING FROM 
                   FAILURE TO SATISFY CERTAIN COMMON LAW RULES.

       (a) In General.--Section 6662 of the Internal Revenue Code 
     of 1986 (relating to imposition of accuracy-related penalty) 
     is amended by adding at the end the following new subsection:
       ``(i) Increase in Penalty in Case of Failure To Satisfy 
     Certain Common Law Rules.--
       ``(1) In general.--To the extent that an underpayment is 
     attributable to a disallowance described in paragraph (2)--
       ``(A) subsection (a) shall be applied with respect to such 
     portion by substituting `40 percent' for `20 percent', and
       ``(B) subsection (d)(2)(B) and section 6664(c) shall not 
     apply.
       ``(2) Disallowances described.--A disallowance is described 
     in this subsection if such disallowance is on account of--
       ``(A) a lack of economic substance (within the meaning of 
     section 7701(m)(1)) for the transaction giving rise to the 
     claimed benefit or the transaction was not respected under 
     section 7701(m)(2),
       ``(B) a lack of business purpose for such transaction or 
     because the form of the transaction does not reflect its 
     substance, or
       ``(C) a failure to meet the requirements of any other 
     similar rule of law.
       ``(3) Increase in penalty not to apply if compliance with 
     disclosure requirements.--Paragraph (1)(A) shall not apply if 
     the taxpayer discloses to the Secretary (as such time and in 
     such manner as the Secretary shall prescribe) such 
     information as the Secretary shall prescribe with respect to 
     such transaction.''.
       (b) Modifications to Penalty on Substantial Understatement 
     of Income Tax.--
       (1) Modification of threshold.--Subparagraph (A) of section 
     6662(d)(1) of such Code is amended to read as follows:
       ``(A) In general.--For purposes of this section, there is a 
     substantial understatement of income tax for any taxable year 
     if the amount of the understatement for the taxable year 
     exceeds the lesser of--
       ``(i) $500,000, or
       ``(ii) the greater of 10 percent of the tax required to be 
     shown on the return for the taxable year or $5,000.''
       (2) Modification of penalty on tax shelters, etc.--Clauses 
     (i) and (ii) of section 6662(d)(2)(C) of such Code are 
     amended to read as follows:
       ``(i) In general.--Subparagraph (B) shall not apply to any 
     item attributable to a tax shelter.''
       ``(ii) Determination of understatements with respect to tax 
     shelters, etc.--In any case in which there are one or more 
     items attributable to a tax shelter, the amount of the 
     understatement under subparagraph (A) shall in no event be 
     less than the amount of understatement which would be 
     determined for the taxable year if all items shown on the 
     return which are not attributable to any tax shelter were 
     treated as being correct. A similar rule shall apply in cases 
     to which subsection (i) applies, whether or not the items are 
     attributable to a tax shelter.''
       (c) Treatment of Amended Returns.--Subsection (a) of 
     section 6664 of such Code is amended by adding at the end the 
     following new sentence: ``For purposes of this subsection, an 
     amended return shall be disregarded if such return is filed 
     on or after the date the taxpayer is first contacted by the 
     Secretary regarding the examination of the return.''

     SEC. 822. PENALTY ON PROMOTERS OF TAX AVOIDANCE STRATEGIES 
                   WHICH HAVE NO ECONOMIC SUBSTANCE, ETC.

       (a) Penalty.--
       (1) In general.--Section 6700 of the Internal Revenue Code 
     of 1986 (relating to promoting abusive tax shelters, etc.) is 
     amended by redesignating subsection (c) as subsection (d) and 
     by inserting after subsection (b) the following new 
     subsection:
       ``(c) Penalty on Substantial Promoters for Promoting Tax 
     Avoidance Strategies Which Have No Economic Substance, Etc.--
       ``(1) Imposition of penalty.--Any substantial promoter of a 
     tax avoidance strategy shall pay a penalty in the amount 
     determined under paragraph (2) with respect to such strategy 
     if such strategy (or any similar strategy promoted by such 
     promoter) fails to meet the requirements of any rule of law 
     referred to in section 6662(i)(2).
       ``(2) Amount of penalty.--The penalty under paragraph (1) 
     with respect to a promoter of a tax avoidance strategy is an 
     amount equal to 100 percent of the gross income derived (or 
     to be derived) by such promoter from such strategy.
       ``(3) Tax avoidance strategy.--For purposes of this 
     subsection, the term `tax avoidance strategy' means any 
     entity, plan, arrangement, or transaction a significant 
     purpose of the structure of which is the avoidance or evasion 
     of Federal income tax.
       ``(4) Substantial promoter.--For purposes of this 
     subsection--
       ``(A) In general.--The term `substantial promoter' means, 
     with respect to any tax avoidance strategy, any promoter if--
       ``(i) such promoter offers such strategy to more than 1 
     potential participant, and
       ``(ii) such promoter may receive fees in excess of $500,000 
     in the aggregate with respect to such strategy.
       ``(B) Aggregation rules.--For purposes of this paragraph--
       ``(i) Related persons.--A promoter and all persons related 
     to such promoter shall be treated as 1 person who is a 
     promoter.
       ``(ii) Similar strategies.--All similar tax avoidance 
     strategies of a promoter shall be treated as 1 tax avoidance 
     strategy.
       ``(C) Promoter.--The term `promoter' means any person who 
     participates in the promotion, offering, or sale of the tax 
     avoidance strategy.
       ``(D) Related person.--Persons are related if they bear a 
     relationship to each other which is described in section 
     267(b) or 707(b).
       ``(4) Coordination with subsection (a).--No penalty shall 
     be imposed by this subsection on any promoter with respect to 
     a tax avoidance strategy if a penalty is imposed under 
     subsection (a) on such promoter with respect to such 
     strategy.''
       (2) Conforming amendment.--Subsection (d) of section 6700 
     of such Code is amended--
       (A) by striking ``Penalty'' and inserting ``Penalties'', 
     and
       (B) by striking ``penalty'' the first place it appears in 
     the text and inserting ``penalties''.
       (b) Increase in Penalty on Promoting Abusive Tax 
     Shelters.--The first sentence of section 6700(a) of such Code 
     is amended by striking ``a penalty equal to'' and all that 
     follows and inserting ``a penalty equal to the greater of 
     $1,000 or 100 percent of the gross income derived (or to be 
     derived) by such person from such activity.''

     SEC. 823. MODIFICATIONS OF PENALTIES FOR AIDING AND ABETTING 
                   UNDERSTATEMENT OF TAX LIABILITY INVOLVING TAX 
                   SHELTERS.

       (a) Imposition of Penalty.--Section 6701(a) of the Internal 
     Revenue Code of 1986 (relating to imposition of penalty) is 
     amended to read as follows:
       ``(a) Imposition of Penalties.--
       ``(1) In general.--Any person--
       ``(A) who aids or assists in, procures, or advises with 
     respect to, the preparation or presentation of any portion of 
     a return, affidavit, claim, or other document,
       ``(B) who knows (or has reason to believe) that such 
     portion will be used in connection with any material matter 
     arising under the internal revenue laws, and
       ``(C) who knows that such portion (if so used) would result 
     in an understatement of the liability for tax of another 
     person,

     shall pay a penalty with respect to each such document in the 
     amount determined under subsection (b).
       ``(2) Certain tax shelters.--If--
       ``(A) any person--
       ``(i) aids or assists in, procures, or advises with respect 
     to the creation, organization, sale, implementation, 
     management, or reporting of a tax shelter (as defined in 
     section 6662(d)(2)(C)(iii)) or of any entity, plan, 
     arrangement, or transaction that fails to meet the 
     requirements of any rule of law referred to in section 
     6662(i)(2), and
       ``(ii) opines, advises, represents, or otherwise indicates 
     (directly or indirectly) that the taxpayer's tax treatment of 
     items attributable to such tax shelter or such entity, plan, 
     arrangement, or transaction and giving rise to an 
     understatement of tax liability would more likely than not 
     prevail or not give rise to a penalty, and
       ``(B) such opinion, advice, representation, or indication 
     is unreasonable,


[[Page H5312]]


     then such person shall pay a penalty in the amount determined 
     under subsection (b). If a standard higher than the more 
     likely than not standard was used in any such opinion, 
     advice, representation, or indication, then subparagraph 
     (A)(ii) shall be applied as if such standard were substituted 
     for the more likely than not standard.''
       (b) Amount of Penalty.--Section 6701(b) of such Code 
     (relating to amount of penalty) is amended--
       (1) by inserting ``or (3)'' after ``paragraph (2)'' in 
     paragraph (1),
       (2) by striking ``subsection (a)'' each place it appears 
     and inserting ``subsection (a)(1)'', and
       (3) by redesignating paragraph (3) as paragraph (4) and by 
     adding after paragraph (2) the following:
       ``(3) Tax shelters.--In the case of--
       ``(A) a penalty imposed by subsection (a)(1) which involves 
     a return, affidavit, claim, or other document relating to a 
     tax shelter or an entity, plan, arrangement, or transaction 
     that fails to meet the requirements of any rule of law 
     referred to in section 6662(i)(2), and
       ``(B) any penalty imposed by subsection (a)(2),

     the amount of the penalty shall be equal to 100 percent of 
     the gross proceeds derived (or to be derived) by the person 
     in connection with the tax shelter or entity, plan, 
     arrangement, or transaction.''
       (c) Referral and Publication.--If a penalty is imposed 
     under section 6701(a)(2) of such Code (as added by subsection 
     (a)) on any person, the Secretary of the Treasury shall--
       (1) notify the Director of Practice of the Internal Revenue 
     Service and any appropriate State licensing authority of the 
     penalty and the circumstances under which it was imposed, and
       (2) publish the identity of the person and the fact the 
     penalty was imposed on the person.
       (d) Conforming Amendments.--
       (1) Section 6701(d) of such Code is amended by striking 
     ``Subsection (a)'' and inserting ``Subsection (a)(1)''.
       (2) Section 6701(e) of such Code is amended by striking 
     ``subsection (a)(1)'' and inserting ``subsection (a)(1)(A)''.
       (3) Section 6701(f) of such Code is amended by inserting 
     ``, tax shelter, or entity, plan, arrangement, or 
     transaction'' after ``document'' each place it appears.

     SEC. 824. FAILURE TO MAINTAIN LISTS.

       Section 6708(a) of the Internal Revenue Code of 1986 
     (relating to failure to maintain lists of investors in 
     potentially abusive tax shelters) is amended by adding at the 
     end the following: ``In the case of a tax shelter (as defined 
     in section 6662(d)(2)(C)(iii)) or entity, plan, arrangement, 
     or transaction that fails to meet the requirements of any 
     rule of law referred to in section 6662(i)(2), the penalty 
     shall be equal to 50 percent of the gross proceeds derived 
     (or to be derived) from each person with respect to which 
     there was a failure and the limitation of the preceding 
     sentence shall not apply.''

     SEC. 825. PENALTY FOR FAILING TO DISCLOSE REPORTABLE 
                   TRANSACTION.

       (a) In General.--Part I of subchapter B of chapter 68 of 
     the Internal Revenue Code of 1986 (relating to assessable 
     penalties) is amended by inserting after section 6707 the 
     following new section:

     ``SEC. 6707A. PENALTY FOR FAILURE TO INCLUDE TAX SHELTER 
                   INFORMATION WITH RETURN.

       ``(a) Imposition of Penalty.--Any person who fails to 
     include with its return of Federal income tax any information 
     required to be included under section 6011 with respect to a 
     reportable transaction shall pay a penalty in the amount 
     determined under subsection (b). No penalty shall be imposed 
     on any such failure if it is shown that such failure is due 
     to reasonable cause.
       ``(b) Amount of Penalty.--
       ``(1) In general.--The amount of the penalty under 
     subsection (a) shall be equal to the greater of--
       ``(A) 5 percent of any increase in Federal tax which 
     results from a difference between the taxpayer's treatment 
     (as shown on its return) of items attributable to the 
     reportable transaction to which the failure relates and the 
     proper tax treatment of such items, or
       ``(B) $100,000.

     For purposes of subparagraph (A), the last sentence of 
     section 6664(a) shall apply.
       ``(2) Listed transaction.--If the failure under subsection 
     (a) relates to a reportable transaction which is the same as, 
     or substantially similar to, a transaction specifically 
     identified by the Secretary as a tax avoidance transaction 
     for purposes of section 6011, paragraph (1)(A) shall be 
     applied by substituting `10 percent' for `5 percent'.
       ``(c) Reportable Transaction.--For purposes of this 
     section, the term `reportable transaction' means any 
     transaction with respect to which information is required 
     under section 6011 to be included with a taxpayer's return of 
     tax because, as determined under regulations prescribed under 
     section 6011, such transaction has characteristics which may 
     be indicative of a tax avoidance transaction.
       ``(d) Coordination With Other Penalties.--The penalty 
     imposed by this section is in addition to any penalty imposed 
     under section 6662.''
       (b) Conforming Amendment.--The table of sections for part I 
     of subchapter B of chapter 68 of such Code is amended by 
     inserting after the item relating to section 6707 the 
     following:

``Sec. 6707A. Penalty for failure to include tax shelter information on 
              return.''

     SEC. 826. REGISTRATION OF CERTAIN TAX SHELTERS WITHOUT 
                   CORPORATE PARTICIPANTS.

       Section 6111(d)(1)(A) of the Internal Revenue Code of 1986 
     (relating to certain confidential arrangements treated as tax 
     shelters) is amended by striking ``for a direct or indirect 
     participant which is a corporation''.

     SEC. 827. EFFECTIVE DATES.

       (a) In General.--Except as provided in subsections (b), 
     (c), and (d), the amendments made by this subtitle shall 
     apply to transactions after the date of the enactment of this 
     Act.
       (b) Section 821.--The amendments made by subsections (b) 
     and (c) of section 821 shall apply to taxable years ending 
     after the date of the enactment of this Act.
       (c) Section 822.--The amendments made by subsection (a) of 
     section 822 shall apply to any tax avoidance strategy (as 
     defined in section 6700(c) of the Internal Revenue Code of 
     1986, as amended by this title) interests in which are 
     offered to potential participants after the date of the 
     enactment of this Act.
       (d) Section 826.--The amendment made by section 826 shall 
     apply to any tax shelter interest which is offered to 
     potential participants after the date of the enactment of 
     this Act.

  PART III--LIMITATIONS ON IMPORTATION OR TRANSFER OF BUILT-IN LOSSES

     SEC. 831. LIMITATION ON IMPORTATION OF BUILT-IN LOSSES.

       (a) In General.--Section 362 of the Internal Revenue Code 
     of 1986 (relating to basis to corporations) is amended by 
     adding at the end the following new subsection:
       ``(e) Limitation on Importation of Built-in Losses.--
       ``(1) In general.--If in any transaction described in 
     subsection (a) or (b) there would (but for this subsection) 
     be an importation of a net built-in loss, the basis of each 
     property described in paragraph (2) which is acquired in such 
     transaction shall (notwithstanding subsections (a) and (b)) 
     be its fair market value immediately after such transaction.
       ``(2) Property described.--For purposes of paragraph (1), 
     property is described in this paragraph if--
       ``(A) gain or loss with respect to such property is not 
     subject to tax under this subtitle in the hands of the 
     transferor immediately before the transfer, and
       ``(B) gain or loss with respect to such property is subject 
     to such tax in the hands of the transferee immediately after 
     such transfer.

     In any case in which the transferor is a partnership, the 
     preceding sentence shall be applied by treating each partner 
     in such partnership as holding such partner's proportionate 
     share of the property of such partnership.
       ``(3) Importation of net built-in loss.--For purposes of 
     paragraph (1), there is an importation of a net built-in loss 
     in a transaction if the transferee's aggregate adjusted bases 
     of property described in paragraph (2) which is transferred 
     in such transaction would (but for this subsection) exceed 
     the fair market value of such property immediately after such 
     transaction.''
       (b) Comparable Treatment Where Liquidation.--Paragraph (1) 
     of section 334(b) of such Code (relating to liquidation of 
     subsidiary) is amended to read as follows:
       ``(1) In general.--If property is received by a corporate 
     distributee in a distribution in a complete liquidation to 
     which section 332 applies (or in a transfer described in 
     section 337(b)(1)), the basis of such property in the hands 
     of such distributee shall be the same as it would be in the 
     hands of the transferor; except that the basis of such 
     property in the hands of such distributee shall be the fair 
     market value of the property at the time of the 
     distribution--
       ``(A) in any case in which gain or loss is recognized by 
     the liquidating corporation with respect to such property, or
       ``(B) in any case in which the liquidating corporation is a 
     foreign corporation, the corporate distributee is a domestic 
     corporation, and the corporate distributee's aggregate 
     adjusted bases of property described in section 362(e)(2) 
     which is distributed in such liquidation would (but for this 
     subparagraph) exceed the fair market value of such property 
     immediately after such liquidation.''
       (c) Effective Date.--The amendments made by this section 
     shall apply to transactions after the date of the enactment 
     of this Act.

     SEC. 832. DISALLOWANCE OF PARTNERSHIP LOSS TRANSFERS.

       (a) Treatment of Contributed Property With Built-in Loss.--
     Paragraph (1) of section 704(c) of the Internal Revenue Code 
     of 1986 is amended by striking ``and'' at the end of 
     subparagraph (A), by striking the period at the end of 
     subparagraph (B) and inserting ``, and'', and by adding at 
     the end the following:
       ``(C) if any property so contributed has a built-in loss--
       ``(i) such built-in loss shall be taken into account only 
     in determining the amount of items allocated to the 
     contributing partner, and
       ``(ii) except as provided in regulations, in determining 
     the amount of items allocated to other partners, the basis of 
     the contributed property in the hands of the partnership 
     shall be treated as being equal to its fair market value 
     immediately after the contribution.


[[Page H5313]]


     For purposes of subparagraph (C), the term `built-in loss' 
     means the excess of the adjusted basis of the property over 
     its fair market value immediately after the contribution.''
       (b) Adjustment to Basis of Partnership Property on Transfer 
     of Partnership Interest If There Is Substantial Built-in 
     Loss.--
       (1) Adjustment required.--Subsection (a) of section 743 of 
     such Code (relating to optional adjustment to basis of 
     partnership property) is amended by inserting before the 
     period ``or unless the partnership has a substantial built-in 
     loss immediately after such transfer''.
       (2) Adjustment.--Subsection (b) of section 743 of such Code 
     is amended by inserting ``or with respect to which there is a 
     substantial built-in loss immediately after such transfer'' 
     after ``section 754 is in effect''.
       (3) Substantial built-in loss.--Section 743 of such Code is 
     amended by adding at the end the following new subsection:
       ``(d) Substantial Built-In Loss.--For purposes of this 
     section, a partnership has a substantial built-in loss with 
     respect to a transfer of an interest in a partnership if the 
     transferee partner's proportionate share of the adjusted 
     basis of the partnership property exceeds 110 percent of the 
     basis of such partner's interest in the partnership.''
       (4) Clerical amendments.--
       (A) The section heading for section 743 of such Code is 
     amended to read as follows:

     ``SEC. 743. ADJUSTMENT TO BASIS OF PARTNERSHIP PROPERTY WHERE 
                   SECTION 754 ELECTION OR SUBSTANTIAL BUILT-IN 
                   LOSS.''

       (B) The table of sections for subpart C of part II of 
     subchapter K of chapter 1 of such Code is amended by striking 
     the item relating to section 743 and inserting the following 
     new item:

``Sec. 743. Adjustment to basis of partnership property where section 
              754 election or substantial built-in loss.''

       (c) Adjustment to Basis of Undistributed Partnership 
     Property If There Is Substantial Basis Reduction.--
       (1) Adjustment required.--Subsection (a) of section 734 of 
     such Code (relating to optional adjustment to basis of 
     undistributed partnership property) is amended by inserting 
     before the period ``or unless there is a substantial basis 
     reduction''.
       (2) Adjustment.--Subsection (b) of section 734 of such Code 
     is amended by inserting ``or unless there is a substantial 
     basis reduction'' after ``section 754 is in effect''.
       (3) Substantial basis reduction.--Section 734 of such Code 
     is amended by adding at the end the following new subsection:
       ``(d) Substantial Basis Reduction.--For purposes of this 
     section, there is a substantial basis reduction with respect 
     to a distribution if the sum of the amounts described in 
     subparagraphs (A) and (B) of subsection (b)(2) exceeds 10 
     percent of the aggregate adjusted basis of partnership 
     property immediately after the distribution.''
       (4) Clerical amendments.--
       (A) The section heading for section 734 of such Code is 
     amended to read as follows:

     ``SEC. 734. ADJUSTMENT TO BASIS OF UNDISTRIBUTED PARTNERSHIP 
                   PROPERTY WHERE SECTION 754 ELECTION OR 
                   SUBSTANTIAL BASIS REDUCTION.''

       (B) The table of sections for subpart B of part II of 
     subchapter K of chapter 1 of such Code is amended by striking 
     the item relating to section 734 and inserting the following 
     new item:

``Sec. 734. Adjustment to basis of undistributed partnership property 
              where section 754 election or substantial basis 
              reduction.''

       (d) Effective Dates.--
       (1) Subsection (a).--The amendment made by subsection (a) 
     shall apply to contributions made after the date of the 
     enactment of this Act.
       (2) Subsection (b).--The amendments made by subsection (a) 
     shall apply to transfers after the date of the enactment of 
     this Act.
       (3) Subsection (c).--The amendments made by subsection (a) 
     shall apply to distributions after the date of the enactment 
     of this Act.

  Mr. BERRY (during the reading). Mr. Speaker, I ask unanimous consent 
that the motion to recommit be considered as read and printed in the 
RECORD.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Arkansas?
  There was no objection.
  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
Arkansas (Mr. Berry) is recognized for 5 minutes in support of his 
motion to recommit.
  Mr. BERRY. Mr. Speaker, this motion to recommit is very simple. It is 
the underlying bill that we are considering today, H.R. 2563, the true 
Bipartisan Patient Protection Act, but with one important difference: 
The costs of the bill are entirely paid for in the motion to recommit.
  The sponsors of the Bipartisan Patient Protection Act had committed 
ourselves to paying for the cost of the bill, and we added these pay-
fors when we presented a substitute to the Committee on Rules. However, 
the Committee on Rules would not even let us offer this substitute.
  The underlying bill, the Bipartisan Patient Protection Act, is nearly 
the same as the Senate-passed bill. It was a bill that was debated for 
2 weeks by the Senate, not 2 hours. It was ultimately passed by the 
Senate in a true bipartisan majority of 59, just like a true bipartisan 
majority passed a similar bill here in the last Congress.
  However, this motion to recommit is even better than either of those 
bills because it keeps our promise that nearly every Member of this 
House, nearly every Member that sits this evening here on this floor 
has promised to pay for our bills and not to raid the Medicare and 
Social Security trust fund.
  Mr. Speaker, this is a commitment we have made to the American 
people, and it should be honored. The provisions to pay for the bill 
are good government provisions. They continue the existing customs 
fees, as did the Senate, and they crack down on sham business 
enterprises designed solely to generate tax benefits. Nothing in the 
recently passed bill is changed.
  I want to remind my colleagues that because the Committee on Rules 
did not make these provisions in order, this motion to recommit is 
Members' only opportunity to vote for an amendment to pay for this 
bill. It is Members' only chance not to rob the Medicare and Social 
Security trust funds.
  I urge a ``yes'' vote.
  Mr. Speaker, I yield the balance of my time to the gentleman from 
South Carolina (Mr. Spratt), the ranking member of the Committee on the 
Budget.
  Mr. SPRATT. Mr. Speaker, day by day, bill by bill, the surplus is 
washing away. The House is driving this budget straight into the 
Medicare trust fund.
  Yesterday, it was the energy bill, with an impact on the budget, 
according to the Congressional Budget Office, of $33 billion over 10 
years. Today it is the Patients' Bill of Rights whose impact is $15 
billion to $25 billion brought to the floor without being scored.
  In each case, Democrats have offered offsets to protest the trust 
funds and the surplus, and in each case, Republicans spurned the offer 
of offsets.
  Mr. Speaker, in 2 days, this House will have whacked $40 to $50 
billion out of the surplus. It is a good thing we are going home.
  Mr. Speaker, let me warn Members, mid-August when we are at home, the 
Congressional Budget Office will complete its midyear update of the 
budget, and when we come back, there will be no question, the House 
will be in the Medicare trust fund. That is where the budget activity 
today will have taken us, by passing bills like this and paying no heed 
whatsoever to the budget. Bring it up, ignore the offset.
  I direct Members' attention to this chart. This shows what thin ice 
the budget is now sitting on. After the energy bill last night and the 
defense bill we reported yesterday, there is a $12 billion bottom line 
remainder in fiscal year 2002. That is black.
  But if we come down here to where we have estimated the August update 
by the Congressional Budget Office, and we have only estimated that 
they will take the economy down by one-half of one percentage point in 
the next year, Members will see that black 12 turns to a red 16. We go 
from a surplus of $12 to $16 billion in deficit, meaning we are $16 
billion into the Medicare trust fund. So much for the lockbox. That is 
not just 1 year, it is every year from now until 2011; so much so, we 
consume the entire Medicare surplus over this period of time.
  Mr. Speaker, the only honest vote is for the motion to recommit, 
which will pay for this bill.
  Mr. TAUZIN. Mr. Speaker, I rise in opposition to the motion to 
recommit.
  Mr. Speaker, I would say to the gentleman if we would be so foolish 
as to adopt this motion to recommit and pass tonight a $7.5 billion tax 
increase, Americans might not want us to come home.
  This motion to recommit not only would put forward this $7.5 billion 
tax increase, but as Members know, it would undo the good work of this 
House in endorsing the great work the gentleman from Georgia (Mr. 
Norwood) has done in reaching agreement on the contentious issue of 
liability.
  Mr. Speaker, I yield 1 minute to the gentleman from Ohio (Mr. 
Boehner), the chairman of the Committee on Education and the Workforce.
  Mr. BOEHNER. Mr. Speaker, the gentleman from Louisiana (Mr. Tauzin)

[[Page H5314]]

mentioned that we would go back to the original liability that would 
drive employers out of the system, drive up costs for employers and 
their employees. We do not want to do that.
  It would also eliminate the association health plans that we have 
worked so hard on over the last 10 years to try to help small employers 
provide health insurance for their employees.
  But of all things, after 40 years of one party controlling this House 
and balancing the budget one time in 40 years, to stand in the well of 
the House and say that this bill will bust the budget, please, give me 
a break.
  Mr. TAUZIN. Mr. Speaker, I yield the balance of my time to the 
gentleman from California (Mr. Thomas).
  Mr. THOMAS. Mr. Speaker, the gentleman said that this is the same 
bill. I know he does not want to revisit the passage of the Norwood 
amendment. It passed. And what is not in the bill now with the Norwood 
amendment is what is in this underlying bill.
  I invite Members to turn to page 121 where it says on line 15, ``no 
preemption of State law.'' And then down on line 4 it says, ``no right 
of action for recovery, indemnity or contribution by issuers against 
treating health care professionals and treating hospitals.'' They gave 
it on line 14, and took it away on line 34. Thank goodness that is no 
longer in the bill.
  Let us visit the tax portion. What the Congressional Budget Office 
said was that if this became law, their bill, the one we changed, it 
would increase premiums 5 percent.

                              {time}  2200

  It does not sound like a lot, but guess what employers do? They will 
then, because their health costs are higher in terms of the insurance, 
lower the wages. The Congressional Budget Office says they do. You have 
to make up that because there is lower revenue. The Congressional 
Budget Office says that your legislation reduces income and the HI 
payroll tax, that is the Medicare Trust Fund, by $13 billion over 10 
years. That is true; but remember, he proudly said, there was a tax 
increase in here. The tax increase that is in here increases the 
general fund because it is revenue. Now, that is good because they take 
general fund revenue and put it over in Social Security to make up the 
lost money because, remember, that payroll reduction also affects the 
Social Security payroll tax fund.
  So what they have done is taken general fund money and put it in the 
Social Security fund, but the corporate tax increase only goes into the 
general fund. You heard the gentleman on the floor. Guess who invades 
the HI trust fund? According to the Congressional Budget Office, their 
underlying bill, the one we are going to vote down in just a minute, 
decreases income and HI payroll taxes by $13.4 billion. The corporate 
tax provision in their bill can only go into general revenue. It cannot 
cover HI.
  They reduce the HI trust fund. Ironically, my friends, if you want to 
protect the HI trust fund, vote ``no'' on the motion to recommit.
  The SPEAKER pro tempore (Mr. Bereuter). Without objection, the 
previous question is ordered on the motion to recommit.
  There was no objection.
  The SPEAKER pro tempore. The question is on the motion to recommit.
  The question was taken; and the Speaker pro tempore announced that 
the noes appeared to have it.


                             Recorded Vote

  Mr. BERRY. Mr. Speaker, I demand a recorded vote.
  A recorded vote was ordered.
  The vote was taken by electronic device, and there were--ayes 208, 
noes 220, not voting 6, as follows:

                             [Roll No. 331]

                               AYES--208

     Abercrombie
     Ackerman
     Allen
     Andrews
     Baca
     Baird
     Baldacci
     Baldwin
     Barcia
     Barrett
     Becerra
     Bentsen
     Berkley
     Berman
     Berry
     Bishop
     Blagojevich
     Blumenauer
     Bonior
     Borski
     Boswell
     Boucher
     Boyd
     Brady (PA)
     Brown (FL)
     Brown (OH)
     Capps
     Capuano
     Cardin
     Carson (IN)
     Carson (OK)
     Clay
     Clayton
     Clement
     Clyburn
     Condit
     Conyers
     Costello
     Coyne
     Cramer
     Crowley
     Cummings
     Davis (CA)
     Davis (FL)
     Davis (IL)
     DeFazio
     DeGette
     Delahunt
     DeLauro
     Deutsch
     Dicks
     Dingell
     Doggett
     Dooley
     Doyle
     Edwards
     Engel
     Eshoo
     Etheridge
     Evans
     Farr
     Fattah
     Filner
     Ford
     Frank
     Frost
     Ganske
     Gephardt
     Gonzalez
     Gordon
     Green (TX)
     Gutierrez
     Hall (OH)
     Hall (TX)
     Harman
     Hastings (FL)
     Hill
     Hilliard
     Hinchey
     Hinojosa
     Hoeffel
     Holden
     Holt
     Honda
     Hooley
     Hoyer
     Inslee
     Israel
     Jackson (IL)
     Jackson-Lee (TX)
     Jefferson
     John
     Johnson, E. B.
     Jones (OH)
     Kanjorski
     Kaptur
     Kennedy (RI)
     Kildee
     Kilpatrick
     Kind (WI)
     Kleczka
     Kucinich
     LaFalce
     Lampson
     Langevin
     Lantos
     Larsen (WA)
     Larson (CT)
     Leach
     Lee
     Levin
     Lewis (GA)
     Lofgren
     Lowey
     Luther
     Maloney (CT)
     Maloney (NY)
     Markey
     Mascara
     Matheson
     Matsui
     McCarthy (MO)
     McCarthy (NY)
     McCollum
     McDermott
     McGovern
     McIntyre
     McKinney
     McNulty
     Meehan
     Meek (FL)
     Meeks (NY)
     Menendez
     Millender-McDonald
     Miller, George
     Mink
     Mollohan
     Moore
     Moran (VA)
     Morella
     Murtha
     Nadler
     Napolitano
     Neal
     Oberstar
     Obey
     Olver
     Ortiz
     Owens
     Pallone
     Pascrell
     Pastor
     Payne
     Pelosi
     Phelps
     Pomeroy
     Price (NC)
     Rahall
     Rangel
     Reyes
     Rivers
     Rodriguez
     Roemer
     Ross
     Rothman
     Roybal-Allard
     Rush
     Sabo
     Sanchez
     Sanders
     Sandlin
     Sawyer
     Schakowsky
     Schiff
     Scott
     Serrano
     Sherman
     Shows
     Skelton
     Slaughter
     Smith (WA)
     Snyder
     Solis
     Spratt
     Stark
     Stenholm
     Strickland
     Tanner
     Tauscher
     Taylor (MS)
     Thompson (MS)
     Thurman
     Tierney
     Towns
     Turner
     Udall (CO)
     Udall (NM)
     Velazquez
     Visclosky
     Waters
     Watson (CA)
     Watt (NC)
     Waxman
     Weiner
     Wexler
     Woolsey
     Wu
     Wynn

                               NOES--220

     Aderholt
     Akin
     Armey
     Bachus
     Baker
     Ballenger
     Barr
     Bartlett
     Barton
     Bass
     Bereuter
     Biggert
     Bilirakis
     Blunt
     Boehlert
     Boehner
     Bonilla
     Bono
     Brady (TX)
     Brown (SC)
     Bryant
     Burr
     Burton
     Buyer
     Callahan
     Calvert
     Camp
     Cannon
     Cantor
     Capito
     Castle
     Chabot
     Chambliss
     Coble
     Collins
     Combest
     Cooksey
     Cox
     Crane
     Crenshaw
     Cubin
     Culberson
     Cunningham
     Davis, Jo Ann
     Davis, Tom
     Deal
     DeLay
     DeMint
     Diaz-Balart
     Doolittle
     Dreier
     Duncan
     Dunn
     Ehlers
     Ehrlich
     Emerson
     English
     Everett
     Ferguson
     Flake
     Fletcher
     Foley
     Forbes
     Fossella
     Frelinghuysen
     Gallegly
     Gekas
     Gibbons
     Gilchrest
     Gillmor
     Gilman
     Goode
     Goodlatte
     Goss
     Graham
     Granger
     Graves
     Green (WI)
     Greenwood
     Grucci
     Gutknecht
     Hansen
     Hart
     Hastert
     Hastings (WA)
     Hayes
     Hayworth
     Hefley
     Herger
     Hilleary
     Hobson
     Hoekstra
     Horn
     Hostettler
     Houghton
     Hulshof
     Hunter
     Hutchinson
     Hyde
     Isakson
     Issa
     Istook
     Jenkins
     Johnson (CT)
     Johnson (IL)
     Johnson, Sam
     Jones (NC)
     Keller
     Kelly
     Kennedy (MN)
     Kerns
     King (NY)
     Kingston
     Kirk
     Knollenberg
     Kolbe
     LaHood
     Largent
     Latham
     LaTourette
     Lewis (CA)
     Lewis (KY)
     Linder
     LoBiondo
     Lucas (KY)
     Lucas (OK)
     Manzullo
     McCrery
     McHugh
     McInnis
     McKeon
     Mica
     Miller (FL)
     Miller, Gary
     Moran (KS)
     Myrick
     Nethercutt
     Ney
     Northup
     Norwood
     Nussle
     Osborne
     Ose
     Otter
     Oxley
     Pence
     Peterson (MN)
     Peterson (PA)
     Petri
     Pickering
     Pitts
     Platts
     Pombo
     Portman
     Pryce (OH)
     Putnam
     Quinn
     Radanovich
     Ramstad
     Regula
     Rehberg
     Reynolds
     Riley
     Rogers (KY)
     Rogers (MI)
     Rohrabacher
     Ros-Lehtinen
     Roukema
     Royce
     Ryan (WI)
     Ryun (KS)
     Saxton
     Scarborough
     Schaffer
     Schrock
     Sensenbrenner
     Sessions
     Shadegg
     Shaw
     Shays
     Sherwood
     Shimkus
     Shuster
     Simmons
     Simpson
     Skeen
     Smith (MI)
     Smith (NJ)
     Smith (TX)
     Souder
     Stearns
     Stump
     Sununu
     Sweeney
     Tancredo
     Tauzin
     Taylor (NC)
     Terry
     Thomas
     Thornberry
     Thune
     Tiahrt
     Tiberi
     Toomey
     Traficant
     Upton
     Vitter
     Walden
     Walsh
     Wamp
     Watkins (OK)
     Watts (OK)
     Weldon (FL)
     Weller
     Whitfield
     Wicker
     Wilson
     Wolf
     Young (AK)
     Young (FL)

                             NOT VOTING--6

     Lipinski
     Paul
     Spence
     Stupak
     Thompson (CA)
     Weldon (PA)

                              {time}  2218

  So the motion to recommit was rejected.
  The result of the vote was announced as above recorded.
  Stated for:
  Mr. STUPAK. Mr. Speaker, on rollcall vote number 331, I was 
unavoidably detained and missed that vote. Had I been here, I would 
have voted ``aye.''
  (Mr. SNYDER asked and was given permission to speak out of order for 
1 minute.)

[[Page H5315]]

   Congratulations and Farewell to Our Colleague, the Honorable Asa 
                               Hutchinson

  Mr. SNYDER. Mr. Speaker, the hour is late, but it is never too late 
to say good-bye and hello to a friend; good-bye to Asa Hutchinson, 
Congressman, and hello to the new head of the DEA, Asa Hutchinson.
  Asa, we will miss you.
  Mr. Speaker, I yield to the gentleman from Missouri (Mr. Hulshof).
  Mr. HULSHOF. Mr. Speaker, I, too, want to add my accolades to the 
departing Member, a classmate of mine, who came in in the 105th 
Congress.
  The gentleman from Arkansas has served with distinction the Third 
Congressional District of Arkansas since his election. As Asa tells it, 
the folks back home in Arkansas were not too impressed about this DEA 
nomination, until they found out that he would be the head of 9,000 
employees and have offices in over 50 countries, at which point they 
then thought it was kind of a big deal.
  Asa, of course, served with distinction on the Committee on the 
Judiciary, and, as some of you who worked with him knew, he was thrust 
into an interesting role with the impeachment matter. But he has also 
been a leader on other issues regarding the Federal Judiciary, whether 
it is regarding our forfeiture laws, whether it is racial profiling, or 
campaign finance.
  I think all of those issues, and the open mindedness that Asa brought 
to those issues, is one reason there was such a tremendous show of 
support, when every one of his colleagues on the Democratic side of the 
aisle on the Committee on the Judiciary signed a letter of support to 
the Senate Committee on the Judiciary, urging Asa's confirmation. I 
think that was a tremendous show of bipartisan support.
  Finally, Mr. Speaker, Asa, we simply say to you that as you continue 
your service to this great Nation, that we wish you and Susan and your 
family Godspeed. We all in this Chamber have been enriched by having 
known you, and we are luckier all the more for the fact that we have 
had a chance to work with you.
  We wish you well.
  The SPEAKER pro tempore (Mr. Bereuter). The question is on the 
passage of the bill.
  The question was taken; and the Speaker pro tempore announced that 
the ayes appeared to have it.
  Mr. McDERMOTT. Mr. Speaker, on that I demand the yeas and nays.
  The yeas and nays were ordered.
  The vote was taken by electronic device, and there were--yeas 226, 
nays 203, not voting 5, as follows:

                             [Roll No. 332]

                               YEAS--226

     Aderholt
     Akin
     Armey
     Bachus
     Baker
     Ballenger
     Barr
     Bartlett
     Barton
     Bass
     Bereuter
     Biggert
     Bilirakis
     Blunt
     Boehlert
     Boehner
     Bonilla
     Bono
     Brady (TX)
     Brown (SC)
     Bryant
     Burr
     Burton
     Buyer
     Callahan
     Calvert
     Camp
     Cannon
     Cantor
     Capito
     Castle
     Chabot
     Chambliss
     Coble
     Collins
     Combest
     Cooksey
     Cox
     Cramer
     Crane
     Crenshaw
     Cubin
     Culberson
     Cunningham
     Davis, Jo Ann
     Davis, Tom
     Deal
     DeLay
     DeMint
     Diaz-Balart
     Doolittle
     Dreier
     Duncan
     Dunn
     Ehlers
     Ehrlich
     Emerson
     English
     Everett
     Ferguson
     Flake
     Fletcher
     Foley
     Forbes
     Fossella
     Frelinghuysen
     Gallegly
     Ganske
     Gekas
     Gibbons
     Gilchrest
     Gillmor
     Gilman
     Goode
     Goodlatte
     Goss
     Graham
     Granger
     Graves
     Green (WI)
     Greenwood
     Grucci
     Gutknecht
     Hansen
     Hart
     Hastert
     Hastings (WA)
     Hayes
     Hayworth
     Hefley
     Herger
     Hilleary
     Hobson
     Hoekstra
     Horn
     Hostettler
     Houghton
     Hulshof
     Hunter
     Hutchinson
     Hyde
     Isakson
     Issa
     Istook
     Jenkins
     Johnson (CT)
     Johnson (IL)
     Johnson, Sam
     Jones (NC)
     Keller
     Kelly
     Kennedy (MN)
     Kerns
     King (NY)
     Kingston
     Kirk
     Knollenberg
     Kolbe
     LaHood
     Largent
     Latham
     LaTourette
     Leach
     Lewis (CA)
     Lewis (KY)
     Linder
     LoBiondo
     Lucas (KY)
     Lucas (OK)
     Manzullo
     McCrery
     McHugh
     McInnis
     McKeon
     Mica
     Miller (FL)
     Miller, Gary
     Moran (KS)
     Morella
     Myrick
     Nethercutt
     Ney
     Northup
     Norwood
     Nussle
     Osborne
     Ose
     Otter
     Oxley
     Pence
     Peterson (MN)
     Peterson (PA)
     Petri
     Pickering
     Pitts
     Platts
     Pombo
     Portman
     Pryce (OH)
     Putnam
     Quinn
     Radanovich
     Ramstad
     Regula
     Rehberg
     Reynolds
     Riley
     Rogers (KY)
     Rogers (MI)
     Rohrabacher
     Ros-Lehtinen
     Roukema
     Royce
     Ryan (WI)
     Ryun (KS)
     Saxton
     Scarborough
     Schaffer
     Schrock
     Sensenbrenner
     Sessions
     Shadegg
     Shaw
     Shays
     Sherwood
     Shimkus
     Shuster
     Simmons
     Simpson
     Skeen
     Smith (MI)
     Smith (NJ)
     Smith (TX)
     Smith (WA)
     Souder
     Stearns
     Stump
     Sununu
     Sweeney
     Tancredo
     Tauzin
     Taylor (NC)
     Terry
     Thomas
     Thornberry
     Thune
     Tiahrt
     Tiberi
     Toomey
     Traficant
     Upton
     Vitter
     Walden
     Walsh
     Wamp
     Watkins (OK)
     Watts (OK)
     Weldon (FL)
     Weldon (PA)
     Weller
     Whitfield
     Wicker
     Wilson
     Wolf
     Young (AK)
     Young (FL)

                               NAYS--203

     Abercrombie
     Ackerman
     Allen
     Andrews
     Baca
     Baird
     Baldacci
     Baldwin
     Barcia
     Barrett
     Becerra
     Bentsen
     Berkley
     Berman
     Berry
     Bishop
     Blagojevich
     Blumenauer
     Bonior
     Borski
     Boswell
     Boucher
     Boyd
     Brady (PA)
     Brown (FL)
     Brown (OH)
     Capps
     Capuano
     Cardin
     Carson (IN)
     Carson (OK)
     Clay
     Clayton
     Clement
     Clyburn
     Condit
     Conyers
     Costello
     Coyne
     Crowley
     Cummings
     Davis (CA)
     Davis (FL)
     Davis (IL)
     DeFazio
     DeGette
     Delahunt
     DeLauro
     Deutsch
     Dicks
     Dingell
     Doggett
     Dooley
     Doyle
     Edwards
     Engel
     Eshoo
     Etheridge
     Evans
     Farr
     Fattah
     Filner
     Ford
     Frank
     Frost
     Gephardt
     Gonzalez
     Gordon
     Green (TX)
     Gutierrez
     Hall (OH)
     Hall (TX)
     Harman
     Hastings (FL)
     Hill
     Hilliard
     Hinchey
     Hinojosa
     Hoeffel
     Holden
     Holt
     Honda
     Hooley
     Hoyer
     Inslee
     Israel
     Jackson (IL)
     Jackson-Lee (TX)
     Jefferson
     John
     Johnson, E. B.
     Jones (OH)
     Kanjorski
     Kaptur
     Kennedy (RI)
     Kildee
     Kilpatrick
     Kind (WI)
     Kleczka
     Kucinich
     LaFalce
     Lampson
     Langevin
     Lantos
     Larsen (WA)
     Larson (CT)
     Lee
     Levin
     Lewis (GA)
     Lofgren
     Lowey
     Luther
     Maloney (CT)
     Maloney (NY)
     Markey
     Mascara
     Matheson
     Matsui
     McCarthy (MO)
     McCarthy (NY)
     McCollum
     McDermott
     McGovern
     McIntyre
     McKinney
     McNulty
     Meehan
     Meek (FL)
     Meeks (NY)
     Menendez
     Millender-McDonald
     Miller, George
     Mink
     Mollohan
     Moore
     Moran (VA)
     Murtha
     Nadler
     Napolitano
     Neal
     Oberstar
     Obey
     Olver
     Ortiz
     Owens
     Pallone
     Pascrell
     Pastor
     Payne
     Pelosi
     Phelps
     Pomeroy
     Price (NC)
     Rahall
     Rangel
     Reyes
     Rivers
     Rodriguez
     Roemer
     Ross
     Rothman
     Roybal-Allard
     Rush
     Sabo
     Sanchez
     Sanders
     Sandlin
     Sawyer
     Schakowsky
     Schiff
     Scott
     Serrano
     Sherman
     Shows
     Skelton
     Slaughter
     Snyder
     Spratt
     Stark
     Stenholm
     Strickland
     Stupak
     Tanner
     Tauscher
     Taylor (MS)
     Thompson (MS)
     Thurman
     Tierney
     Towns
     Turner
     Udall (CO)
     Udall (NM)
     Velazquez
     Visclosky
     Waters
     Watson (CA)
     Watt (NC)
     Waxman
     Weiner
     Wexler
     Woolsey
     Wu
     Wynn

                             NOT VOTING--5

     Lipinski
     Paul
     Solis
     Spence
     Thompson (CA)

                              {time}  2342

  So the bill was passed.
  The result of the vote was announced as above recorded.
  A motion to recommit was laid on the table.

                          ____________________