[Congressional Record Volume 155, Number 114 (Monday, July 27, 2009)]
[House]
[Pages H8819-H8822]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




VETERANS NONPROFIT RESEARCH AND EDUCATION CORPORATIONS ENHANCEMENT ACT 
                                OF 2009

  Mr. FILNER. Mr. Speaker, I move to suspend the rules and pass the 
bill (H.R. 2770) to amend title 38, United States Code, to modify and 
update provisions of law relating to nonprofit research and education 
corporations, and for other purposes, as amended.

[[Page H8820]]

  The Clerk read the title of the bill.
  The text of the bill is as follows:

                               H.R. 2770

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Veterans Nonprofit Research 
     and Education Corporations Enhancement Act of 2009''.

     SEC. 2. GENERAL AUTHORITIES ON ESTABLISHMENT OF CORPORATIONS.

       (a) Authorization of Multi-medical Center Research 
     Corporations.--
       (1) In general.--Section 7361 of title 38, United States 
     Code, is amended--
       (A) by redesignating subsection (b) as subsection (e); and
       (B) by inserting after subsection (a) the following new 
     subsection (b):
       ``(b)(1) Subject to paragraph (2), a corporation 
     established under this subchapter may facilitate the conduct 
     of research, education, or both at more than one medical 
     center. Such a corporation shall be known as a `multi-medical 
     center research corporation'.
       ``(2) The board of directors of a multi-medical center 
     research corporation under this subsection shall include the 
     official at each Department medical center concerned who is, 
     or who carries out the responsibilities of, the medical 
     center director of such center as specified in section 
     7363(a)(1)(A)(i) of this title.
       ``(3) In facilitating the conduct of research, education, 
     or both at more than one Department medical center under this 
     subchapter, a multi-medical center research corporation may 
     administer receipts and expenditures relating to such 
     research, education, or both, as applicable, performed at the 
     Department medical centers concerned.''.
       (2) Expansion of existing corporations to multi-medical 
     center research corporations.--Such section is further 
     amended by adding at the end the following new subsection:
       ``(f) A corporation established under this subchapter may 
     act as a multi-medical center research corporation under this 
     subchapter in accordance with subsection (b) if--
       ``(1) the board of directors of the corporation approves a 
     resolution permitting facilitation by the corporation of the 
     conduct of research, education, or both at the other 
     Department medical center or medical centers concerned; and
       ``(2) the Secretary approves the resolution of the 
     corporation under paragraph (1).''.
       (b) Restatement and Modification of Authorities on 
     Applicability of State Law.--
       (1) In general.--Section 7361 of such title, as amended by 
     subsection (a) of this section, is further amended by 
     inserting after subsection (b) the following new subsection 
     (c):
       ``(c) Any corporation established under this subchapter 
     shall be established in accordance with the nonprofit 
     corporation laws of the State in which the applicable 
     Department medical center is located and shall, to the extent 
     not inconsistent with any Federal law, be subject to the laws 
     of such State. In the case of any multi-medical center 
     research corporation that facilitates the conduct of 
     research, education, or both at Department medical centers 
     located in different States, the corporation shall be 
     established in accordance with the nonprofit corporation laws 
     of the State in which one of such Department medical centers 
     is located.''.
       (2) Conforming amendment.--Section 7365 of such title is 
     repealed.
       (c) Clarification of Status of Corporations.--Section 7361 
     of such title, as amended by this section, is further 
     amended--
       (1) in subsection (a), by striking the second sentence; and
       (2) by inserting after subsection (c) the following new 
     subsection (d):
       ``(d)(1) Except as otherwise provided in this subchapter or 
     under regulations prescribed by the Secretary, any 
     corporation established under this subchapter, and its 
     officers, directors, and employees, shall be required to 
     comply only with those Federal laws, regulations, and 
     executive orders and directives that apply generally to 
     private nonprofit corporations.
       ``(2) A corporation under this subchapter is not--
       ``(A) owned or controlled by the United States; or
       ``(B) an agency or instrumentality of the United States.''.
       (d) Reinstatement of Requirement for 501(c)(3) Status of 
     Corporations.--Subsection (e) of section 7361 of such title, 
     as redesignated by subsection (a)(1) of this section, is 
     further amended by inserting ``section 501(c)(3) of'' after 
     ``exempt from taxation under''.

     SEC. 3. CLARIFICATION OF PURPOSES OF CORPORATIONS.

       (a) Clarification of Purposes.--Subsection (a) of section 
     7362 of title 38, United States Code, is amended in the first 
     sentence--
       (1) by striking ``Any corporation'' and all that follows 
     through ``facilitate'' and inserting ``A corporation 
     established under this subchapter shall be established to 
     provide a flexible funding mechanism for the conduct of 
     approved research and education at one or more Department 
     medical centers and to facilitate functions related to the 
     conduct of''; and
       (2) by inserting before the period at the end the 
     following: ``or centers''.
       (b) Modification of Defined Term Relating to Education and 
     Training.--Subsection (b) of such section is amended in the 
     matter preceding paragraph (1) by striking ``the term 
     `education and training' '' and inserting ``the term 
     `education' includes education and training and''.
       (c) Repeal of Role of Corporations With Respect to 
     Fellowships.--Paragraph (1) of subsection (b) of such section 
     is amended by striking the flush matter following 
     subparagraph (C).
       (d) Availability of Education for Families of Veteran 
     Patients.--Paragraph (2) of subsection (b) of such section is 
     amended by striking ``to patients and to the families'' and 
     inserting ``and includes education and training for patients 
     and families''.

     SEC. 4. MODIFICATION OF REQUIREMENTS FOR BOARDS OF DIRECTORS 
                   OF CORPORATIONS.

       (a) Requirements for Department Board Members.--Paragraph 
     (1) of section 7363(a) of title 38, United States Code, is 
     amended to read as follows:
       ``(1) with respect to the Department medical center--
       ``(A)(i) the director (or directors of each Department 
     medical center, in the case of a multi-medical center 
     research corporation);
       ``(ii) the chief of staff; and
       ``(iii) as appropriate for the activities of such 
     corporation, the associate chief of staff for research and 
     the associate chief of staff for education; or
       ``(B) in the case of a Department medical center at which 
     one or more of the positions referred to in subparagraph (A) 
     do not exist, the official or officials who are responsible 
     for carrying out the responsibilities of such position or 
     positions at the Department medical center; and''.
       (b) Requirements for Non-department Board Members.--
     Paragraph (2) of such section is amended--
       (1) by inserting ``not less than two'' before ``members''; 
     and
       (2) by striking ``and who'' and all that follows through 
     the period at the end and inserting ``and who have 
     backgrounds, or business, legal, financial, medical, or 
     scientific expertise, of benefit to the operations of the 
     corporation.''.
       (c) Clarification That Department Employees May Serve as 
     Executive Directors.--Subsection (b) of section 7363 of such 
     title is amended in the first sentence, by inserting after 
     ``executive director who'' the following: ``may be an 
     employee of the Department and who''.
       (d) Conflicts of Interest.--Subsection (c) of section 7363 
     of such title is amended by striking ``, employed by, or have 
     any other financial relationship with'' and inserting ``or 
     employed by''.

     SEC. 5. CLARIFICATION OF POWERS OF CORPORATIONS.

       (a) In General.--Section 7364 of title 38, United States 
     Code, is amended to read as follows:

     ``Sec. 7364. General powers

       ``(a) In General.--(1) A corporation established under this 
     subchapter may, solely to carry out the purposes of this 
     subchapter--
       ``(A) accept, administer, retain, and spend funds derived 
     from gifts, contributions, grants, fees, reimbursements, and 
     bequests from individuals and public and private entities;
       ``(B) enter into contracts and agreements with individuals 
     and public and private entities;
       ``(C) subject to paragraph (2), set fees for education and 
     training facilitated under section 7362 of this title, and 
     receive, retain, administer, and spend funds in furtherance 
     of such education and training;
       ``(D) reimburse amounts to the applicable appropriation 
     account of the Department for the Office of General Counsel 
     for any expenses of that Office in providing legal services 
     attributable to research and education agreements under this 
     subchapter; and
       ``(E) employ such employees as the corporation considers 
     necessary for such purposes and fix the compensation of such 
     employees.
       ``(2) Fees charged pursuant to paragraph (1)(C) for 
     education and training described in that paragraph to 
     individuals who are officers or employees of the Department 
     may not be paid for by any funds appropriated to the 
     Department.
       ``(3) Amounts reimbursed to the Office of General Counsel 
     under paragraph (1)(D) shall be available for use by the 
     Office of the General Counsel only for staff and training, 
     and related travel, for the provision of legal services 
     described in that paragraph and shall remain available for 
     such use without fiscal year limitation.
       ``(b) Transfer and Administration of Funds.--(1) Except as 
     provided in paragraph (2), any funds received by the 
     Secretary for the conduct of research or education at a 
     Department medical center or centers, other than funds 
     appropriated to the Department, may be transferred to and 
     administered by a corporation established under this 
     subchapter for such purposes.
       ``(2) A Department medical center may reimburse the 
     corporation for all or a portion of the pay, benefits, or 
     both of an employee of the corporation who is assigned to the 
     Department medical center if the assignment is carried out 
     pursuant to subchapter VI of chapter 33 of title 5.
       ``(3) A Department medical center may retain and use funds 
     provided to it by a corporation established under this 
     subchapter. Such funds shall be credited to the applicable 
     appropriation account of the Department and shall be 
     available, without fiscal year limitation, for the purposes 
     of that account.
       ``(c) Research Projects.--Except for reasonable and usual 
     preliminary costs for project planning before its approval, a 
     corporation established under this subchapter may not spend 
     funds for a research project unless the project is approved 
     in accordance with procedures prescribed by the Under 
     Secretary for Health for research carried out with Department 
     funds. Such procedures shall include a scientific review 
     process.
       ``(d) Education Activities.--Except for reasonable and 
     usual preliminary costs for activity

[[Page H8821]]

     planning before its approval, a corporation established under 
     this subchapter may not spend funds for an education activity 
     unless the activity is approved in accordance with procedures 
     prescribed by the Under Secretary for Health.
       ``(e) Policies and Procedures.--The Under Secretary for 
     Health may prescribe policies and procedures to guide the 
     spending of funds by corporations established under this 
     subchapter that are consistent with the purpose of such 
     corporations as flexible funding mechanisms and with Federal 
     and State laws and regulations, and executive orders, 
     circulars, and directives that apply generally to the receipt 
     and expenditure of funds by nonprofit organizations exempt 
     from taxation under section 501(c)(3) of the Internal Revenue 
     Code of 1986.''.
       (b) Conforming Amendment.--Section 7362(a) of such title, 
     as amended by section 3(a)(1) of this Act, is further amended 
     by striking the last sentence.

     SEC. 6. REDESIGNATION OF SECTION 7364A OF TITLE 38, UNITED 
                   STATES CODE.

       (a) Redesignation.--Section 7364A of title 38, United 
     States Code, is redesignated as section 7365 of such title.
       (b) Clerical Amendments.--The table of sections at the 
     beginning of chapter 73 of such title is amended--
       (1) by striking the item relating to section 7364A; and
       (2) by striking the item relating to section 7365 and 
     inserting the following new item:

``7365. Coverage of employees under certain Federal tort claims 
              laws.''.

     SEC. 7. IMPROVED ACCOUNTABILITY AND OVERSIGHT OF 
                   CORPORATIONS.

       (a) Additional Information in Annual Reports.--Subsection 
     (b) of section 7366 of title 38, United States Code, is 
     amended to read as follows:
       ``(b)(1) Each corporation shall submit to the Secretary 
     each year a report providing a detailed statement of the 
     operations, activities, and accomplishments of the 
     corporation during that year.
       ``(2)(A) A corporation with revenues in excess of $500,000 
     for any year shall obtain an audit of the corporation for 
     that year.
       ``(B) A corporation with annual revenues between $100,000 
     and $500,000 shall obtain an audit of the corporation at 
     least once every three years.
       ``(C) Any audit under this paragraph shall be performed by 
     an independent auditor.
       ``(3) The corporation shall include in each report to the 
     Secretary under paragraph (1) the following:
       ``(A) The most recent audit of the corporation under 
     paragraph (2).
       ``(B) The most recent Internal Revenue Service Form 990 
     `Return of Organization Exempt from Income Tax' or equivalent 
     and the applicable schedules under such form.''.
       (b) Conflict of Interest Policies.--Subsection (c) of such 
     section is amended to read as follows:
       ``(c) Each director, officer, and employee of a corporation 
     established under this subchapter shall be subject to a 
     conflict of interest policy adopted by that corporation.''.
       (c) Establishment of Appropriate Payee Reporting 
     Threshold.--Subsection (d)(3)(C) of such section is amended 
     by striking ``$35,000'' and inserting ``$50,000''.

  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
California (Mr. Filner) and the gentleman from Florida (Mr. Stearns) 
each will control 20 minutes.
  The Chair recognizes the gentleman from California.
  Mr. FILNER. Mr. Speaker, I yield myself such time as I may consume.
  I rise in strong support of H.R. 2770. VA research is a very vital 
mission of the Department of Veterans Affairs. Focusing on research for 
the special health care of our veterans, VA's program has been 
recognized for excellence over many, many years. Boasting such 
developments as the cardiac pacemaker and the CAT scan, VA also lays 
claim to three Nobel Laureates and six Lasker Award winners.
  In 1988 Congress allowed the Secretary of the Department of Veterans 
Affairs to authorize the establishment of nonprofit research 
corporations. Currently, 82 of these NPCs provide their affiliated VA 
health care systems and medical centers with a highly valued means of 
administering non-VA Federal research grants and private sector funds 
in support of VA research and education.
  The fundamental purpose of these nonprofits is to serve veterans by 
supporting VA research and medical education to improve the quality of 
care that veterans receive. It has been 20 years now since the creation 
of the NPCs, and in that time the statute has never been updated. The 
purpose of this bill is to modernize and clarify that statute relating 
to nonprofit research education corporations so they can better support 
the research that is undertaken in the VA.
  Specifically, the bill expands the general authorities on 
establishing nonprofit research corporations by authorizing the 
creation of multi-medical center research corporations where two or 
more VA medical centers share one corporation. It also clarifies the 
purposes of the corporations by allowing them to support functions 
related to research and education, such as travel to scientific 
conferences, improvements in laboratories with new equipment purchase, 
and support for the institutional review board.
  Additionally, the bill modifies the requirements for the board of 
directors of the corporations so that they can acquire board members 
with legal and financial expertise for sound governance and financial 
management of the corporations. The legislation also provides 
clarification on reimbursements and other fee charges.
  Finally, H.R. 2770 improves accountability and oversight of the 
corporations by detailing the audit requirements so that they are 
consistent with OMB Circular A-133, which provides guidance on audits, 
as well as clarifying that employees of the corporations are to be 
subject to a conflict of interest policy adopted by the corporation, 
instead of applying the Federal conflict of interest regulations to 
non- Federal employees.
  I urge my colleagues to support H.R. 2770, as amended.
  Mr. Speaker, I reserve the balance of my time.
  Mr. STEARNS. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I rise in support of H.R. 2770, as amended, the Veterans 
Nonprofit Research and Education Corporations Enhancement Act of 2009. 
This bill would amend title 38, United States Code, to modify and 
update provisions of law relating to nonprofit research and education 
corporations, and for other purposes.
  VA nonprofit research corporations, or NPCs as they are called, are 
independent entities that serve to provide a flexible funding mechanism 
for the use of non-VA funds to conduct VA-approved research. Last year, 
with $250 million in revenue, these organizations supported more than 
4,000 research and education programs to benefit our veterans.
  It has been 20 years, however, since we passed the law that 
established this public-private partnership, and it is important for us 
to ensure that the statute stays relevant for today's complex research 
and compliance requirements and provides VA with the necessary 
oversight authority to simply safeguard the management of these funds. 
This bill, H.R. 2770, as amended, would update and modernize the law to 
improve the operation and strengthen the oversight of these not-for-
profit entities.
  A key provision of the bill would allow an NPC to be shared among a 
number of VA medical centers to simply reduce administrative costs and 
to allow smaller NPCs to better achieve the potential to support VA 
research. So this bill would provide a number of new guidance and 
policy requirements to improve management of the NPCs and simply boost 
VA's oversight capability.
  I want to thank the chairman, Mr. Filner, and the ranking member, Mr. 
Buyer, for working in concert to jointly sponsor this bill and move it 
forward, as they have done. This bill is supported by the VA, the 
Friends of VA Medical Care and Health Research, and the National 
Association of VA Research and Education Foundations.
  I would like to again offer my congratulations to the chairman and 
ranking member of the subcommittee, Mike Michaud and Henry Brown, for 
their hard work on the bill, and obviously I appreciate Mr. Filner and 
Mr. Buyer, the ranking member, for working together. I urge my 
colleagues to support the bill.
  Mr. Speaker, I yield back the balance of my time.


                             General Leave

  Mr. FILNER. Mr. Speaker, I ask unanimous consent that all Members may 
have 5 legislative days in which to revise and extend their remarks and 
include extraneous material on H.R. 2770, as amended.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from California?
  There was no objection.
  Mr. BUYER. Mr. Speaker, I rise in support of H.R. 2770, as amended, 
the Veterans Nonprofit Research and Education Corporations Enhancement 
Act of 2009.
  I am pleased to join with Chairman Filner in introducing and 
supporting this legislation that would revise and improve the laws 
governing VA Nonprofit Research Corporations (NPCs).

[[Page H8822]]

  These state chartered, private organizations are dedicated entirely 
to supporting approved research and education at affiliated VA medical 
centers. They rely solely on non appropriated funds to conduct their 
activities, but are subject to VA oversight and regulation. There are 
86 NPCs located in forty-one states, Puerto Rico, and the District of 
Columbia.
  However, the law that authorized and governs the operation of these 
organizations has not been updated since 1988. Last year, the VA Office 
of Inspector General (IG) conducted an audit and found that there is a 
need to strengthen VA oversight and control over NPC funds and 
administration.
  H.R. 2770, as amended would address concerns raised by the IG and 
update other provisions of the law to improve the operation of the non-
profits to better meet the needs of the VA.
  The primary enhancements would include allowing VA to establish 
Multi-Medical Center Research Corporations, which is a voluntary 
sharing of one NPC among two or more VA Medical Centers, to increase 
research capabilities at smaller facilities.
  The bill would change requirements for Board membership to include at 
least two non-federal employee members that have business, legal, 
financial, medical, or scientific expertise that would benefit the NPC.
  It would clarify the circumstances in which an NPC could accept, 
administer, retain, and spend funds received; enter into contracts and 
agreements; charge and retain fees for educational programs; and 
provide certain reimbursements to VA for legal services.
  The bill would also raise the threshold for requirements to conduct 
independent audits and require that all NPCs establish a comprehensive 
conflict of interest policy.
  It is timely that we enact this legislation to strengthen VA's 
authority to guide expenditures and increase accountability and 
oversight of NPCs. It is important to enhancing VA's ability to 
capitalize on private research funds to improve the quality of care for 
our nation's veterans. I urge my colleagues to support H.R. 2770, as 
amended.
  Mr. FILNER. Mr. Speaker, I urge my colleagues to unanimously support 
the bill, and I yield back the balance of my time.
  The SPEAKER pro tempore. The question is on the motion offered by the 
gentleman from California (Mr. Filner) that the House suspend the rules 
and pass the bill, H.R. 2770, as amended
  The question was taken; and (two-thirds being in the affirmative) the 
rules were suspended and the bill, as amended, was passed.
  A motion to reconsider was laid on the table.

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