To amend the Internal Revenue Code of 1986 to allow a business credit for qualified expenditures for medical professional malpractice insurance.

Summary: Medical Malpractice Relief Act of 2004 - Amends the Internal Revenue Code to allow a business tax credit for taxable years beginning in 2004 or 2005 for expenditures for medical professional malpractice insurance. Allows a credit for: (1) 20 percent of the malpractice insurance expenditures of a physician who practices in any surgical specialty or subspecialty, emergency medicine, obstetrics, or anesthesiology or who does intervention work which is reflected in medical malpractice insurance expenditures; (2) ten percent of such expenditures of a physician who practices in general medicine, allergy, dermatology, pathology, or other specialty; and (3) 15 percent of such expenditures of any hospital, clinic, or long-term care provider. Limits the amount of expenditures that may be taken into account to twice the average of costs of medical malpractice insurance for similarly situated health care providers, as determined by the Secretary of Health and Human Services.

Directs the Secretary, acting through the Administrator of the Health Resources and Services Administration, to make grants to certain non-profit hospitals, clinics, and long-term care providers to assist such entities in defraying their medical malpractice insurance expenditures. Limits the amount of such grants to 15 percent of the medical malpractice insurance expenditures incurred by such entities in any year.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Medical Malpractice Relief Act of 
2004''.

SEC. 2. CREDIT FOR QUALIFIED EXPENDITURES FOR MEDICAL PROFESSIONAL 
              MALPRACTICE INSURANCE.

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

``SEC. 45G. CREDIT FOR EXPENDITURES FOR MEDICAL PROFESSIONAL 
              MALPRACTICE INSURANCE.

    ``(a) General Rule.--For purposes of section 38, in the case of an 
eligible person, the medical malpractice insurance expenditure tax 
credit determined under this section for a taxable year is the amount 
equal to the applicable percentage of qualified medical malpractice 
insurance expenditures.
    ``(b) Limitation.--
            ``(1) In general.--The amount of qualified medical 
        malpractice insurance expenditures taken into account under 
        subsection (a) for a taxable year with respect to an eligible 
        person shall not exceed the amount equal to twice the average 
        of costs of qualified medical malpractice insurance for 
        similarly situated eligible persons.
            ``(2) Average costs.--For purposes of paragraph (1), the 
        Secretary of Health and Human Services, after consultation with 
        State boards of medical licensure and State boards (or 
        agencies) regulating insurance, shall--
                    ``(A) determine average costs (rounded to the 
                nearest whole dollar) of providing or furnishing 
                general medical malpractice liability insurance to 
                eligible persons, and
                    ``(B) certify the amount of such costs to the 
                Secretary on or before the 15th day of November of each 
                year.
    ``(c) Definitions and Special Rule.--For purposes of this section--
            ``(1) Qualified medical malpractice insurance 
        expenditure.--
                    ``(A) In general.--The term `qualified medical 
                malpractice insurance expenditure' means so much of any 
                professional insurance premium, surcharge, payment, or 
                other cost or expense which is paid or incurred in the 
                taxable year by an eligible person for the sole purpose 
                of providing or furnishing general medical malpractice 
                liability insurance for such eligible person.
            ``(2) Eligible person.--The term `eligible person' means--
                    ``(A) any physician (as defined in section 
                213(d)(4)) who practices in any surgical specialty or 
                subspecialty, emergency medicine, obstetrics, 
                anesthesiology or who does intervention work which is 
                reflected in medical malpractice insurance 
                expenditures,
                    ``(B) any physician (as so defined) who practices 
                in general medicine, allergy, dermatology, pathology, 
                or any other specialty not otherwise described in this 
                section, and
                    ``(C) any hospital, clinic, or long-term care 
                provider,
        which meets applicable legal requirements to provide the health 
        care services involved.
            ``(3) Applicable percentage.--The applicable percentage 
        is--
                    ``(A) 20 percent in the case of a person described 
                in paragraph (2)(A),
                    ``(B) 10 percent in the case of a person described 
                in paragraph (2)(B), and
                    ``(C) 15 percent in the case of a person described 
                in paragraph (2)(C).
            ``(4) Similarly situated.--The determination of whether 
        persons are similarly situated shall be made on the basis of 
        medical practices primarily located within a statistical area 
        (as defined in section 142(k)(2)) and shall differentiate 
        between specialty and subspecialty medical practices.
    ``(d) Election not to Claim Credit.--This section shall not apply 
to a taxpayer for any taxable year if such taxpayer elects to have this 
section not apply for such taxable year.
    ``(e) Termination.--This section shall not apply to taxable years 
beginning after December 31, 2005.''.
    (b) Credit Made Part of General Business Credit.--Section 38(b) of 
such Code (relating to current year business credit) is amended by 
striking ``plus'' at the end of paragraph (14), by striking the period 
at the end of paragraph (15) and inserting ``, plus'', and by adding at 
the end the following new paragraph:
            ``(16) the medical malpractice insurance expenditure tax 
        credit determined under section 45G(a).''.
    (c) Limitation on Carryback.--Section 39(d) of such Code (relating 
to transition rules) is amended by adding at the end the following new 
paragraph:
            ``(11) No carryback of medical malpractice insurance 
        expenditure tax credit before effective date.--No portion of 
        the unused business credit for any taxable year which is 
        attributable to the credit determined under section 45G may be 
        carried back to any taxable year beginning before January 1, 
        2004.''.
    (d) Denial of Double Benefit.--Section 280C of such Code (relating 
to certain expenses for which credits are allowable) is amended by 
adding at the end the following new subsection:
    ``(d) Credit for Medical Malpractice Liability Insurance 
Premiums.--
            ``(1) In general.--No deduction shall be allowed for that 
        portion of the qualified medical malpractice insurance 
        expenditures otherwise allowable as a deduction for the taxable 
        year which is equal to the amount of the credit allowable for 
        the taxable year under section 45G (determined without regard 
        to section 38(c)).
            ``(2) Controlled groups.--In the case of a corporation 
        which is a member of a controlled group of corporations (within 
        the meaning of section 41(f)(5)) or a trade or business which 
        is treated as being under common control with other trades or 
        business (within the meaning of section 41(f)(1)(B)), this 
        subsection shall be applied under rules prescribed by the 
        Secretary similar to the rules applicable under subparagraphs 
        (A) and (B) of section 41(f)(1).''.
    (e) Grants to Non-Profit Hospitals, Clinics, and Long-Term Care 
Providers.--
            (1) In general.--The Secretary of Health and Human 
        Services, acting through the Administrator of the Health 
        Resources and Services Administration, shall award grants to 
        eligible non-profit hospitals, clinics, and long-term care 
        providers to assist such hospitals, clinics, and long-term care 
        providers in defraying qualified medical malpractice insurance 
        expenditures.
            (2) Eligible non-profit hospital, clinic, or long-term care 
        provider.--To be eligible to receive a grant under paragraph 
        (1) an entity shall--
                    (A) be a non-profit hospital, clinic, or long-term 
                care provider;
                    (B) be an organization described in section 501(c) 
                of the Internal Revenue Code of 1986 and exempt from 
                tax under section 501(a) of such Code for the year for 
                which an application is submitted under subparagraph 
                (C); and
                    (C) prepare and submit to the Secretary of Health 
                and Human Services an application at such time, in such 
                manner, and containing such information as the 
                Secretary may require.
            (3) Amount of grant.--The amount of a grant to a non-profit 
        hospital, clinic, or long-term care provider under paragraph 
        (1) shall equal 15 percent of the amount of the qualified 
        medical malpractice insurance expenditures of the hospital, 
        clinic, or long-term care provider for the year involved.
            (4) Qualified medical malpractice insurance expenditure.--
        In this subsection, the term ``qualified medical malpractice 
        insurance expenditure'' means so much of any professional 
        insurance premium, surcharge, payment or other cost or expense 
        which is incurred by a non-profit hospital, clinic, or long-
        term care provider in a year for the sole purpose of providing 
        or furnishing general medical malpractice liability insurance 
        for such hospital, clinic, or long-term care provider as does 
        not exceed twice the average of such costs for similarly 
        situated hospitals, clinics, or long-term care provider homes.
            (5) Authorization of appropriations.--There are authorized 
        to be appropriated to carry out this subsection such sums as 
        may be necessary for each of fiscal years 2005 and 2006.
    (f) Clerical Amendment.--The table of sections for subpart D of 
part IV of subchapter A of chapter 1 of such Code is amended by adding 
at the end the following new item:

``Sec. 45G. Credit for expenditures for medical professional 
                            malpractice insurance.''.
    (g) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2003.