SECTION 1. DEFINITIONS.

    (a) Health Care Business Defined.--Section 101 of title 11, United 
States Code, is amended by inserting after paragraph (27) the 
following:
            ``(27A) `health care business'--
                    ``(A) means any public or private entity (without 
                regard to whether that entity is organized for profit 
                or not for profit) that is primarily engaged in 
                offering to the general public facilities and services 
                for--
                            ``(i) the diagnosis or treatment of injury, 
                        deformity, or disease; and
                            ``(ii) surgical, drug treatment, 
                        psychiatric or obstetric care; and
                    ``(B) includes--
                            ``(i) any--
                                    ``(I) general or specialized 
                                hospital;
                                    ``(II) ancillary ambulatory, 
                                emergency, or surgical treatment 
                                facility;
                                    ``(III) hospice;
                                    ``(IV) home health agency; and
                                    ``(V) other health care institution 
                                that is similar to an entity referred 
                                to in subclause (I), (II), (III), or 
                                (IV); and
                            ``(ii) any long-term care facility, 
                        including any--
                                    ``(I) skilled nursing facility;
                                    ``(II) intermediate care facility;
                                    ``(III) assisted living facility;
                                    ``(IV) home for the aged;
                                    ``(V) domicilary care facility; and
                                    ``(VI) health care institution that 
                                is related to a facility referred to in 
                                subclause (I), (II), (III), (IV), or 
                                (V), if that institution is primarily 
                                engaged in offering room, board, 
                                laundry, or personal assistance with 
                                activities of daily living and 
                                incidentals to activities of daily 
                                living;''.
    (b) Patient Defined.--Section 101 of title 11, United States Code, 
as amended by subsection (a) of this section, is amended by inserting 
after paragraph (40) the following:
            ``(40A) `patient' means any person who obtains or receives 
        services from a health care business;''.
    (d) Patient Records Defined.--Section 101 of title 11, United 
States Code, as amended by subsection (b) of this section, is amended 
by inserting after paragraph (40A) the following:
            ``(40B) `patient records' means any written document 
        relating to a patient or record recorded in a magnetic, 
        optical, or other form of electronic medium;''.

SEC. 2. DISPOSAL OF PATIENT RECORDS.

    (a) In General.--Subchapter III of chapter 3 of title 11, United 
States Code, is amended by adding at the end the following:
``Sec. 351. Disposal of patient records
    ``If a health care business commences a case under chapter 7, 9, or 
11, and the trustee does not have a sufficient amount of funds to pay 
for the storage of patient records in the manner required under 
applicable Federal or State law, the following requirements shall 
apply:
            ``(1) The trustee shall mail, by certified mail, a written 
        request to each appropriate Federal or State agency to request 
        permission from that agency to deposit the patient records with 
        that agency.
            ``(2) If no appropriate Federal or State agency agrees to 
        permit the deposit of patient records referred to in paragraph 
        (1) by the date that is 60 days after the trustee mails a 
        written request under that paragraph, the trustee shall--
                    ``(A) publish notice, in 1 or more appropriate 
                newspapers, that if those patient records are not 
                claimed by the patient or an insurance provider (if 
                applicable law permits the insurance provider to make 
                that claim) by the date that is 60 days after the date 
                of that notification, the trustee will destroy the 
                patient records; and
                    ``(B) during the 60-day period described in 
                subparagraph (A), the trustee shall attempt to notify 
                directly each patient that is the subject of the 
                patient records concerning the patient records by 
                mailing to the last known address of that patient an 
                appropriate notice regarding the claiming or disposing 
                of patient records.
            ``(3) If, after providing the notification under paragraph 
        (2), patient records are not claimed during the 60-day period 
        described in paragraph (2)(A) or in any case in which a notice 
        is mailed under paragraph (2)(B), during the 90-day period 
        beginning on the date on which the notice is mailed, by a 
        patient or insurance provider in accordance with that 
        paragraph, the trustee shall destroy those records by--
                    ``(A) if the records are written, shredding or 
                burning the records; or
                    ``(B) if the records are magnetic, optical, or 
                other electronic records, by otherwise destroying those 
                records so that those records cannot be retrieved.''.
    (b) Clerical Amendment.--The chapter analysis for chapter 3 of 
title 11, United States Code, is amended by inserting after the item 
relating to section 350 the following:

``351. Disposal of patient records.''.

SEC. 3. ADMINISTRATIVE EXPENSE CLAIM FOR COSTS OF CLOSING A HEALTH CARE 
              BUSINESS.

    Section 503(b) of title 11, United States Code, is amended--
            (1) in paragraph (5), by striking ``and'' at the end;
            (2) in paragraph (6), by striking the period at the end and 
        inserting ``; and''; and
            (3) by adding at the end the following:
            ``(7) the actual, necessary costs and expenses of closing a 
        health care business incurred by a trustee, including any cost 
        or expense incurred--
                    ``(A) in disposing of patient records in accordance 
                with section 351; or
                    ``(B) in connection with transferring patients from 
                the health care business that is in the process of 
                being closed to another health care business.''.

SEC. 4. APPOINTMENT OF OMBUDSMAN TO ACT AS PATIENT ADVOCATE.

    (a) In General.--
            (1) Appointment of ombudsman.--Subchapter II of chapter 3 
        of title 11, United States Code, is amended by inserting after 
        section 331 the following:
``Sec. 332. Appointment of ombudsman
    ``(a) Not later than 30 days after a case is commenced by a health 
care business under chapter 7, 9, or 11, the court shall appoint an 
ombudsman to represent the interests of the patients of the health care 
business.
    ``(b) An ombudsman appointed under subsection (a) shall--
            ``(1) monitor the quality of patient care, to the extent 
        necessary under the circumstances, including reviewing records 
        and interviewing patients and physicians;
            ``(2) not later than 60 days after the date of appointment, 
        and not less frequently than every 60 days thereafter, report 
        to the court, at a hearing or in writing, regarding the quality 
        of patient care at the health care business involved; and
            ``(3) if the ombudsman determines that the quality of 
        patient care is declining significantly or is otherwise being 
        materially compromised, notify the court by motion or written 
        report, with notice to appropriate parties in interest, 
        immediately upon making that determination.
    ``(c) An ombudsman shall maintain any information obtained by the 
ombudsman under this section that relates to patients (including 
information relating to patient records) as confidential 
information.''.
            (2) Clerical amendment.--The chapter analysis for chapter 3 
        of title 11, United States Code, is amended by inserting after 
        the item relating to section 331 the following:

``332. Appointment of ombudsman.''.
    (b) Compensation of Ombudsman.--Section 330(a)(1) of title 11, 
United States Code, is amended--
            (1) in the matter proceeding subparagraph (A), by inserting 
        ``an ombudsman appointed under section 331, or'' before ``a 
        professional person''; and
            (2) in subparagraph (A), by inserting ``ombudsman,'' before 
        ``professional person''.

SEC. 5. DEBTOR IN POSSESSION; DUTY OF TRUSTEE TO TRANSFER PATIENTS.

    (a) In General.--Section 704(a) of title 11, United States Code, is 
amended--
            (1) in paragraph (8), by striking ``and'' at the end;
            (2) in paragraph (9), by striking the period and inserting 
        ``; and''; and
            (3) by adding at the end the following:
            ``(10) use all reasonable and best efforts to transfer 
        patients from a health care business that is in the process of 
        being closed to an appropriate health care business that--
                    ``(A) is in the vicinity of the health care 
                business that is closing;
                    ``(B) provides the patient with services that are 
                substantially similar to those provided by the health 
                care business that is in the process of being closed; 
                and
                    ``(C) maintains a reasonable quality of care.''.
    (b) Conforming Amendment.--Section 1106(a)(1) of title 11, United 
States Code, is amended by striking ``and 704(9)'' and inserting 
``704(9), and 704(10)''.
Amends bankruptcy provisions to prescribe guidelines for disposal of the patient records of a health care business (including a hospital, a health maintenance organization, or a nursing home) that commences a proceeding for debtor relief.  Provides for disposal with a State or Federal agency, the patient or an insurance provider, or by destruction. 
(Sec. 3) Allows an administrative expense claim for the costs of closing a health care business, including disposal of patient records and transfer of patients to another health care business. 
(Sec. 4) Requires the bankruptcy court to appoint an ombudsman to represent the interests of the patients of a health care business within 30 days after commencement of a case under chapter 7 (Liquidation), 9 (Adjustment of Debts of a Municipality), or 11 (Reorganization). 
(Sec 5.) Requires the bankruptcy trustee to use all reasonable and best efforts to transfer patients from the health care business in the process of being closed to an appropriate substitute.
A bill to amend title 11, United States Code, to provide for health care and employee benefits, and for other purposes.