[House Report 107-184]
[From the U.S. Government Publishing Office]



107th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 1st Session                                                    107-184

======================================================================



 
PROVIDING FOR CONSIDERATION OF H.R. 2563, BIPARTISAN PATIENT PROTECTION 
                                  ACT

                                _______
                                

  August 2 (legislative day, August 1), 2001.--Referred to the House 
                   Calendar and ordered to be printed

                                _______
                                

     Mr. Goss, from the Committee on Rules, submitted the following

                              R E P O R T

                       [To accompany H. Res. 219]

    The Committee on Rules, having had under consideration 
House Resolution 219, by a record vote of 7 to 3, report the 
same to the House with the recommendation that the resolution 
be adopted.

                summary of provisions of the resolution

    The resolution provides for consideration of H.R. 2563, the 
Bipartisan Patient Protection Act, under a structured rule. The 
rule provides two hours of general debate equally divided and 
controlled by the chairman and ranking minority member of the 
Committee on Energy and Commerce, the Committee on Ways and 
Means and the Committee on Education and the Workforce. The 
rule waives all points of order against consideration of the 
bill.
    The rule makes in order only the amendments printed in the 
Rules Committee report accompanying the resolution, which may 
be offered only in the order printed in the report, may be 
offered only by a Member designated in the report, shall be 
considered as read, shall be 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 in the 
House or in the Committee of the Whole. The rule waives all 
points of order against the amendments printed in the report.
    Finally, the rule provides one motion to recommit with or 
without instructions.

                            COMMITTEE VOTES

    Pursuant to clause 3(b) of House rule XIII the results of 
each record vote on an amendment or motion to report, together 
with the names of those voting for and against, are printed 
below:

Rules Committee record vote No. 40

    Date: August 1, 2001.
    Measure: H.R. 2563.
    Motion By: Mr. Frost.
    Summary of Motion: To make in order the amendment in the 
nature of a substitute by Representatives Ganske and Dingell 
which is identical to H.R. 2563, but adds Title VIII, which 
fully offsets the bill with non-Medicare and non-Social 
Security surplus dollars by clarifying the customs user fees 
will be extended through 2011 rather than 2006. Also makes a 
series of changes to the tax code to reduce fraudulent tax 
shelters by clarifying and slightly strengthening the economic 
substance doctrine, modifying penalty provisions in 
circumstances involving tax avoidance strategies that have no 
economic substance, and halting the importation of foreign 
losses.
    Results: Defeated 3 to 6.
    Vote by Member: Goss--nay; Linder--nay; Pryce--nay; 
Hastings (WA)--nay; Myrick--nay; Frost--yea; Hall--yea; 
Hastings (FL)--yea; Dreier--nay.

Rules Committee record vote No. 41

    Date: August 1, 2001.
    Measure: H.R. 2563.
    Motion By: Mr. Goss.
    Summary of Motion: To report the resolution.
    Results: Agreed to 7 to 3.
    Vote by Member: Goss--yea; Linder--yea; Pryce--yea; 
Hastings (WA)--yea; Myrick--yea; Sessions--yea; Frost--nay; 
Hall--nay; Hastings (FL)--nay; Dreier--yea.

           SUMMARY OF AMENDMENTS MADE IN ORDER UNDER THE RULE

    (Summaries derived from information provided by sponsors.)
    Thomas/Lipinski/Fletcher/Phelps/Johnson, Sam/Dooley/
Cooksey/Lucas (KY)/Hunter: Adds Association Health Plans to the 
bill and strikes section 511 (Limitations on Number of Medical 
Savings Accounts (MSAs)), replacing it with fully expanded 
MSAs. (40 minutes)
    Norwood: Provides patient protections and the right to 
independent medical review for denials of medical care by the 
health plan; guarantees patients new federal remedies to hold 
their health plans accountable when they have been injured by 
wrongful denial or delay of medical care; allows cases against 
employers to be removed to federal court by the defendant; 
allows cases against health insurers to be heard in state 
court; allows employers to designate decision makers who will 
have sole liability for benefit determinations; ensures that 
patients must exhaust the independent medical review process 
before seeking expanded damages in court; allows patients to 
seek injunctive relief at any time for irreparable harm; allows 
unlimited economic damages in both federal and state court; 
limits non-economic damages at $1.5 million; provides that 
punitive damages will be capped at $1.5 million and will be 
available only where the designated decision maker fails to 
comply with the independent medical reviewer's decision that 
the claim for benefits should be granted; and limits class 
action lawsuits under ERISA and RICO to participants in a group 
health plan established by a single plan sponsor. (60 minutes)
    Thomas/Cox/Sensenbrenner/Tauzin/Boehner: Reforms the 
medical malpractice laws for health care providers to place 
time limits on lawsuits, cap damages, establish the collateral 
source rule, provide for several liability, and protect against 
lawsuits for products that meet FDA standards. Grandfathers 
existing laws and allows future state laws to supercede federal 
standards. (40 minutes)
    Text of Amendments made in order under the rule:

 1. An Amendment To Be Offered by Representative Thomas of California, 
or Representative Lipinski of Illinois, or a Designee, Debatable for 40 
                                Minutes

    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; medicaland 
dental practices; medical laboratories; professional consulting 
services; sanitary services; 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 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 assessmentsof 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 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 
withinsuch 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;
          ``(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 participantsand 
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, 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 is 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 orotherwise) 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 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 
arrangementpursuant 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).''.

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 
                inaccordance 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 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.
                              ----------                              


2. An Amendment To Be Offered by Representative Norwood of Georgia, or 
                  a Designee, Debatable for 60 Minutes

  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 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) priorto 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 
                recordkeeper' 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 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 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.
                              ----------                              


 3. An Amendment To Be Offered by Representative Thomas of California, 
or Representative Sensenbrenner of Wisconsin, or a Designee, Debatable 
                             for 40 Minutes

    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 aclaimant 
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.

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--
          (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.

                                
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