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[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4840 Introduced in House (IH)]

103d CONGRESS
  2d Session
                                H. R. 4840

   To provide for reform of health insurance, including tax benefits 
  relating to health insurance and medical malpractice and antitrust 
                                reform.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                             July 27, 1994

     Mr. Sam Johnson of Texas (for himself, Mr. Doolittle, and Mr. 
 Hutchinson) introduced the following bill; which was referred jointly 
to the Committees on Energy and Commerce, Education and Labor, Ways and 
                        Means, and the Judiciary

_______________________________________________________________________

                                 A BILL

 
   To provide for reform of health insurance, including tax benefits 
  relating to health insurance and medical malpractice and antitrust 
                                reform.

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

SECTION 1. SHORT TITLE.

    (a) Short Title.--This Act may be cited as ``The Prescription for 
Health Act of 1994''.
    (b) Table of Contents.--

Sec. 1. Short title.
                       TITLE I--INSURANCE REFORMS

   Subtitle A--Reform of Insured Market for Employers and Individuals

                        Part 1--General Reforms

Sec. 101. Assurance of renewability of coverage.
Sec. 102. Limitation on annual premium increases.
Sec. 103. Assurance of continuity of coverage.
Sec. 104. Limitation on continuation premiums.
Sec. 105. Basis for variations in premiums.
Sec. 106. Disclosure of rating practices.
Sec. 107. Enforcement.
Sec. 108. Definitions.
Sec. 109. Effective date.
                       Part 2--State Preemptions

Sec. 111. Prohibition of State benefit mandate.
Sec. 112. Elimination of restrictions on group purchase of insurance.
        Subtitle B--ERISA and Internal Revenue Code Requirements

Sec. 131. Clarification of ERISA preemption.
Sec. 132. Solvency requirements for single-employer plans.
Sec. 133. Clarification of VEBA contributions.
                         TITLE II--TAX FAIRNESS

Sec. 201. Individuals allowed deduction from gross income for cost of 
                            health insurance and contributions to 
                            medical savings accounts.
                  TITLE III--MEDICAL SAVINGS ACCOUNTS

Sec. 301. Medical savings accounts.
                     TITLE IV--MEDICAL MALPRACTICE

Sec. 401. Applicability and preemption.
Sec. 402. Statute of limitations.
Sec. 403. Scope of liability.
Sec. 404. Limitation on noneconomic damages.
Sec. 405. Treatment of payments for future economic losses.
Sec. 406. Treatment of costs and attorney's fees.
Sec. 407. Collateral sources.
Sec. 408. Damages relating to medical product liability claims.
Sec. 409. Definitions.
Sec. 410. Effective date.
                       TITLE V--ANTITRUST REFORM

Sec. 501. Publication of antitrust guidelines on activities of health 
                            plans.
Sec. 502. Issuance of health care certificates of public advantage.
                     TITLE VI--CONSUMER INFORMATION

Sec. 601. Requirement for disclosure of prices for health care 
                            services.

                       TITLE I--INSURANCE REFORMS

   Subtitle A--Reform of Insured Market for Employers and Individuals

                        PART 1--GENERAL REFORMS

SEC. 101. ASSURANCE OF RENEWABILITY OF COVERAGE.

    (a) In General.--An insurer may not cancel coverage or deny renewal 
of coverage of health insurance with respect to an employer or an 
individual other than--
            (1) for nonpayment of premiums,
            (2) for fraud or other misrepresentations,
            (3) for noncompliance with plan provisions, or
            (4) because the insurer is ceasing to provide any health 
        insurance in the State, or, in the case of a health maintenance 
        organization, in a geographic area with respect to employer or 
        individuals, respectively.
    (b) Limitation on Market Reentry.--If an insurer terminates the 
offering of health insurance plans in an area with respect to the 
market for employers or individuals, the insurer may not offer such a 
health insurance plan to any employer or individual, respectively, in 
the area until 5 years after the date of the termination.

SEC. 102. LIMITATION ON ANNUAL PREMIUM INCREASES.

    An insurer may not provide for an increase in the premium charged 
an employer or an individual for health insurance in a percentage that 
exceeds the percentage change in the premium charged any other employer 
or individual with the same characteristics, for similar benefits, and 
for the same area.

SEC. 103. ASSURANCE OF CONTINUITY OF COVERAGE.

    (a) In General.--No insurer shall deny health insurance coverage to 
any employer or individual, and no sponsor of a group health plan shall 
deny coverage to an eligible individual, on the basis of health status 
or preexisting condition, if the employer or individual was covered by 
health insurance or a group health plan for the same condition by 
another insurer or group health plan for a period of not less than 12 
months within the 15-month period ending with the month in which the 
application for coverage is made.
    (b) Preexisting Conditions.--An insurer or sponsor of a group 
health plan shall waive any period applicable to a preexisting 
condition under health insurance or a group health plan if the employer 
or individual was covered by health insurance or a group health plan 
for the same condition by another insurer or sponsor of a group health 
plan for a period of not less than 12 months within the 15-month period 
ending with the month in which the application for coverage is made.
    (c) Application of Capacity Limits.--Subsection (a) shall not apply 
if the insurer has reached its capacity to provide additional health 
insurance coverage and has stopped providing any new health insurance 
coverage in the State involved.

SEC. 104. LIMITATION ON CONTINUATION PREMIUMS.

    The premium charged by an insurer with respect to an employer or an 
individual covered under health insurance by another insurer for a 
period of not less than 12 consecutive months may not exceed the 
greater of the amount charged during the previous rating period or the 
premium charged to any other employer or individual with the same 
characteristics, for similar benefits, and for the same area.

SEC. 105. BASIS FOR VARIATIONS IN PREMIUMS.

    Nothing in sections 102 and 104 shall be construed as prohibiting 
variations in health insurance premiums among employers or individuals 
based on differences in covered services, age, gender, family 
composition, geographic area, or group size.

SEC. 106. DISCLOSURE OF RATING PRACTICES.

    An insurer shall upon request fully disclose all actuarial 
assumptions and methods used in establishing its premiums for health 
insurance at the time it offers, or renews coverage to any employer or 
individual.

SEC. 107. ENFORCEMENT.

    Any insurer or sponsor of a group health plan which fails to comply 
with the provisions of this part shall be subject to a civil money 
penalty of $250,000 for each individual for each violation. The 
provisions of section 1128A of the Social Security Act (other than 
subsections (a) and (b)) shall apply to civil money penalties under 
this section in the same manner as they apply to a penalty or 
proceeding under section 1128A(a) of such Act.

SEC. 108. DEFINITIONS.

    For purposes of this title:
            (1)(A) The term ``health insurance'' means any contract of 
        health insurance, including any hospital or medical service 
        policy or certificate, hospital or medical service plan 
        contract, or health maintenance organization group contract, 
        that is provided by an insurer, other than health insurance 
        described in subparagraph (B).
            (B) The term ``health insurance'' does not include any of 
        the following (or any combination thereof):
                            (i) Coverage only for accident, dental, 
                        vision, disability income, or long-term care 
                        insurance, or any combination thereof.
                            (ii) Medicare supplemental health 
                        insurance.
                            (iii) Coverage issued as a supplement to 
                        liability insurance.
                            (iv) Worker's compensation or similar 
                        insurance.
                            (v) Automobile medical-payment insurance.
                            (vi) Coverage for a specified disease or 
                        illness.
                            (vii) A hospital or fixed indemnity policy 
                        (unless the Secretary determines that such a 
                        policy provides sufficiently comprehensive 
                        coverage of a benefit so that it should be 
                        treated as a health benefit plan).
                            (viii) Credit insurance.
            (2) The term ``insurer'' means a licensed insurance 
        company, a prepaid hospital or medical service plan, a health 
        maintenance organization, or multiple employer health plan (as 
        defined in section 3(40) of the Employee Retirement Income 
        Security Act of 1974) regulated under State or Federal law for 
        solvency.
            (3) The term ``employer'' has the meaning given such term 
        under section 3(5) of the Employee Retirement Income Security 
        Act of 1974.
            (4) The term ``group health plan'' has the meaning given 
        such term in section 5000(b)(1) of the Internal Revenue Code of 
        1986.

SEC. 109. EFFECTIVE DATE.

    This part shall first apply to plan years beginning after the date 
of the enactment of this Act.

                       PART 2--STATE PREEMPTIONS

SEC. 111. PROHIBITION OF STATE BENEFIT MANDATE.

    No provision of State or local law shall apply to any insurer that 
requires the coverage under health insurance of any specific benefits, 
services, or categories of health care, or services of any class or 
type of provider of health care.

SEC. 112. ELIMINATION OF RESTRICTIONS ON GROUP PURCHASE OF INSURANCE.

    No provision of State or local law shall apply that prohibits 2 or 
more employers or groups from obtaining coverage under a multiple 
health insurance plan.

SEC. 113. EFFECTIVE DATE.

    This part shall take effect on the date of the enactment of this 
Act.

        Subtitle B--ERISA and Internal Revenue Code Requirements

SEC. 131. CLARIFICATION OF ERISA PREEMPTION.

    (a) In General.--Section 514(b)(6)(A) of the Employee Retirement 
Income Security Act of 1974 (29 U.S.C. 1144(b)(6)(A)) is amended--
            (1) in clause (i), by striking ``in the case'' and 
        inserting ``In the case'', and by striking in subclause (ii) 
        ``, and'' and inserting a period; and
            (2) in clause (ii), by striking ``in the case'' and 
        inserting ``In the case'', and by adding at the end the 
        following new sentence: ``For purposes of this clause, a State 
        law which regulates insurance shall not be treated as 
        inconsistent with the preceding sections of this title solely 
        because such law provides standards described in clause (i)(I) 
        and provisions described in clause (i)(II).''.
    (b) Effective Date.--The amendments made by subsection (b) shall 
apply to plan years beginning after the date of the enactment of this 
Act.

SEC. 132. SOLVENCY REQUIREMENTS FOR SINGLE-EMPLOYER PLANS.

    (a) In General.--Section 609 of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1168) is amended--
            (1) by redesignating subsection (e) as subsection (f); and
            (2) by inserting after subsection (d) the following new 
        subsection:
    ``(e) Solvency Requirements for Single-Employer Plans.--
            ``(1) In general.--The Secretary shall prescribe by 
        regulation--
                    ``(A) solvency standards for group health plans 
                that are single-employer plans which will ensure that 
                benefits under such plans will be provided in full when 
                due, and
                    ``(B) rules for monitoring and enforcing compliance 
                with such standards.
            ``(2) Treatment of excess or stop-loss coverage.--In 
        prescribing solvency standards pursuant to paragraph (1), the 
        Secretary shall take into consideration the extent to which a 
        plan's potential liabilities are covered by excess or stop-loss 
        coverage.
            ``(3) Assets held in trust.--For purposes of complying with 
        regulations prescribing solvency standards pursuant to 
        paragraph (1), the plan sponsor of each group health plan 
        shall, in accordance with such regulations, take such steps as 
        are necessary to ensure that plan assets held for the purpose 
        of complying with such solvency standards are held in trust 
        under the plan and are available solely for such purpose.''.
    (b) Deadline for Issuance of Regulations.--Not later than one year 
after the date of the enactment of this Act, the Secretary of Labor (in 
consultation with the Secretary of Health and Human Services) shall 
issue final regulations carrying out the requirements of the amendments 
made by subsection (a).

SEC. 133. CLARIFICATION OF VEBA CONTRIBUTIONS.

    Paragraph (1) of section 419A(c) of the Internal Revenue Code of 
1986 (relating to qualified asset account; limitation on additions to 
account) is amended by striking ``and'' at the end of subparagraph (A), 
by striking the period at the end of subparagraph (B) and inserting ``, 
and'', and by adding at the end the following new subparagraph:
                    ``(C) in the case of an account providing medical 
                benefits, compliance with Federal or State solvency 
                requirements.''

                         TITLE II--TAX FAIRNESS

SEC. 201. INDIVIDUALS ALLOWED DEDUCTION FROM GROSS INCOME FOR COST OF 
              HEALTH INSURANCE AND CONTRIBUTIONS TO MEDICAL SAVINGS 
              ACCOUNTS.

    (a) In General.--Subsection (a) of section 62 of the Internal 
Revenue Code of 1986 is amended by inserting after paragraph (15) the 
following new paragraph:
            ``(16) Medical expenses attributable to health plan 
        coverage.--
                    ``(A) In general.--The deduction allowed by section 
                213 for--
                            ``(i) amounts paid for coverage under any 
                        health plan, and
                            ``(ii) contributions to any medical savings 
                        account (as defined in section 7524).
                    ``(B) Exception.--Subparagraph (A)(i) shall not 
                apply to coverage of an individual who has coverage 
                described in section 213(f)(3)(B).''.
    (b) Revision of Medical Expense Deduction.--Subsection (a) of 
section 213 of such Code is amended to read as follows:
    ``(a) Allowance of Deduction.--There shall be allowed as a 
deduction the amount equal to the sum of--
            ``(1) the amounts paid during the taxable year for coverage 
        of the taxpayer, his spouse, and dependents (as defined in 
        section 152) under any health plan,
            ``(2) in the case of a taxpayer who is an eligible 
        individual (as defined in subsection (f)), the amounts paid in 
        cash during the taxable year by or on behalf of such taxpayer 
        to a medical savings account for the benefit of the taxpayer, 
        his spouse, and dependents (as so defined) if such spouse and 
        dependents are eligible individuals, and
            ``(3) the expenses (other than expenses described in 
        paragraph (1)) paid during the taxable year, not compensated by 
        insurance or otherwise, for medical care of the taxpayer, his 
        spouse, and dependents (as so defined) to the extent such 
        expenses exceed 7.5 percent of the adjusted gross income of the 
        taxpayer.
Paragraph (1) shall not apply if the taxpayer, or the spouse of the 
taxpayer, is eligible to participate in any health plan maintained by 
any employer of such taxpayer or spouse.''
    (c) Definitions and Special Rules Relating to Medical Savings 
Accounts.--Section 213 of such Code is amended by adding at the end the 
following new subsection:
    ``(f) Definitions and Special Rules Relating to Medical Savings 
Accounts.--
            ``(1) Only 1 account per family.--Except as provided in 
        regulations prescribed by this Secretary, no deduction shall be 
        allowed under subsection (a)(2) for amounts paid to any medical 
        savings account for the benefit of an individual, such 
        individual's spouse, or any dependent of such individual or 
        spouse if such individual, spouse, or dependent is a 
        beneficiary of any other medical savings account.
            ``(2) Dollar limitation.--The amount allowable as a 
        deduction under subsection (a)(2) for the taxable year shall 
        not exceed the lesser of--
                    ``(A) the lowest deductible under any catastrophic 
                health plan providing coverage to any beneficiary of 
                the medical savings account, or
                    ``(B)(i) $2,500, or
                    ``(ii) $5,000 if the catastrophic health plan 
                covering the taxpayer provides coverage for more than 1 
                individual.
        A beneficiary of such account who has attained age 65 before 
        the close of the taxable year shall not be taken into account 
        in determining the limitation under the preceding sentence.
            ``(3) Eligible individual.--For purposes of this 
        subsection--
                    ``(A) In general.--The term `eligible individual' 
                means any individual who is covered under a 
                catastrophic health plan throughout the calendar year 
                in which or with which the taxable year ends.
                    ``(B) Limitation.--Such term does not include an 
                individual who is 65 years of age or older, unless the 
                individual is covered under a catastrophic health plan 
                that is a primary plan (within the meaning of section 
                1862(b)(2)(A) of the Social Security Act).
            ``(4) Catastrophic health plan.--For purposes of this 
        subsection--
                    ``(A) In general.--The term `catastrophic health 
                plan' means a health plan covering specified expenses 
                incurred by an individual for medical care for such 
                individual and the spouse and dependents (as defined in 
                section 152) of such individual only to the extent such 
                expenses covered by the plan for any calendar year 
                exceed $1,800 ($3,600 if the catastrophic health plan 
                covering the taxpayer provides coverage for more than 1 
                individual) or such higher amounts as may be specified 
                by the plan.
                    ``(B) Cost-of-living adjustment.--In the case of 
                any calendar year after 1994, each dollar amount in 
                subparagraph (A) shall be increased by an amount equal 
                to--
                            ``(i) such dollar amount, multiplied by
                            ``(ii) the cost-of-living adjustment 
                        determined under section 1(f)(3) for such 
                        calendar year.
                If any increase under the preceding sentence is not a 
                multiple of $50, such increase shall be rounded to the 
                nearest multiple of $50.
            ``(5) No deduction for medical expenses paid from 
        account.--The amount otherwise taken into account under 
        subsection (a) as expenses paid for medical care shall be 
        reduced by the amount (if any) of the distributions from any 
        medical savings account of the taxpayer during the taxable year 
        which is not includible in gross income by reason of being used 
        for medical care.''
    (d) Exclusion of Employer Contributions To Medical Savings Accounts 
From Employment Taxes.--
            (1) Social security taxes.--
                    (A) Subsection (a) of section 3121 of such Code is 
                amended by striking ``or'' at the end of paragraph 
                (20), by striking the period at the end of paragraph 
                (21) and inserting ``; or'', and by inserting after 
                paragraph (21) the following new paragraph:
                    ``(22) remuneration paid to or on behalf of an 
                employee if (and to the extent that) at the time of 
                payment of such remuneration it is reasonable to 
                believe that a corresponding deduction is allowable 
                under section 213(a)(2).''
                    (B) Subsection (a) of section 209 of the Social 
                Security Act is amended by striking ``or'' at the end 
                of paragraph (17), by striking the period at the end of 
                paragraph (18) and inserting ``; or'', and by inserting 
                after paragraph (18) the following new paragraph:
            ``(19) remuneration paid to or on behalf of an employee if 
        (and to the extent that) at the time of payment of such 
        remuneration it is reasonable to believe that a corresponding 
        deduction is allowable under section 213(a)(2) of the Internal 
        Revenue Code of 1986.''
            (2) Railroad retirement tax.--Subsection (e) of section 
        3231 of such Code is amended by adding at the end thereof the 
        following new paragraph:
            ``(10) Employer contributions to medical savings 
        accounts.--The term `compensation' shall not include any 
        payment made to or on behalf of an employee if (and to the 
        extent that) at the time of payment of such remuneration it is 
        reasonable to believe that a corresponding deduction is 
        allowable under section 213(a)(2).''
            (3) Unemployment tax.--Subsection (b) of section 3306 of 
        such Code is amended by striking ``or'' at the end of paragraph 
        (15), by striking the period at the end of paragraph (16) and 
        inserting ``; or'', and by inserting after paragraph (16) the 
        following new paragraph:
                    ``(17) remuneration paid to or on behalf of an 
                employee if (and to the extent that) at the time of 
                payment of such remuneration it is reasonable to 
                believe that a corresponding deduction is allowable 
                under section 213(a)(2).''
            (4) Withholding tax.--Subsection (a) of section 3401 of 
        such Code is amended by striking ``or'' at the end of paragraph 
        (19), by striking the period at the end of paragraph (20) and 
        inserting ``; or'', and by inserting after paragraph (20) the 
        following new paragraph:
                    ``(21) remuneration paid to or on behalf of an 
                employee if (and to the extent that) at the time of 
                payment of such remuneration it is reasonable to 
                believe that a corresponding deduction is allowable 
                under section 213(a)(2).''
    (e) Refundable Income Tax Credit Equivalent to Exemption From FICA 
Taxes for Nonemployment-Related Purchases of Health Plan Coverage and 
Contributions to Medical Savings Accounts.--
            (1) In general.--Subpart C of part IV of subchapter A of 
        chapter 1 of such Code (relating to refundable credits) is 
        amended by redesignating section 35 as section 36 and by 
        inserting after section 34 the following new section:

``SEC. 35. FICA TAXES ON AMOUNTS USED TO PAY FOR PURCHASE OF HEALTH 
              PLAN COVERAGE AND TO MAKE CONTRIBUTIONS TO MEDICAL 
              SAVINGS ACCOUNTS.

    ``(a) Allowance of Credit.--In the case of an individual, there 
shall be allowed as a credit against the tax imposed by this subtitle 
for the taxable year an amount equal to the allocable FICA tax for such 
year.
    ``(b) Allocable FICA Tax.--For purposes of this section, the term 
`allocable FICA tax' means, for any taxable year, the sum of--
            ``(1) 2.9 percent of the amounts described in subsection 
        (c) for the calendar year ending with or within such taxable 
        year, and
            ``(2) the sum of the amounts by which the taxes imposed by 
        sections 3101(a) and 3111(a) would have been reduced for such 
        calendar year if the contribution and benefit base (as 
        determined under section 230 of the Social Security Act) for 
        such calendar year were reduced by the aggregate of the amounts 
        described in subsection (c).
    ``(c) Amounts Described.--
            ``(1) In general.--The amounts described in this subsection 
        are--
                    ``(A) the amounts paid for coverage of the 
                taxpayer, his spouse, and dependents (as defined in 
                section 152) under any health plan, and
                    ``(B) in the case of a taxpayer who is an eligible 
                individual (as defined in section 213(f)), the amounts 
                paid in cash by or on behalf of such taxpayer to a 
                medical savings account for the benefit of the 
                taxpayer, his spouse, and dependents (as so defined) if 
                such spouse and dependents are eligible individuals.
        Subparagraph (A) shall not apply if the taxpayer, or the spouse 
        of the taxpayer, is eligible to participate in any health plan 
        maintained by any employer of such taxpayer or spouse.
            ``(2) Limitations.--
                    ``(A) In general.--An amount shall be treated as 
                not described in this subsection if the taxpayer's 
                wages (as defined in section 3121) were reduced by 
                reason of such amount.
                    ``(B) Medical savings accounts.--An amount shall be 
                treated as not described in this subsection if a 
                deduction is not allowed for such amount under section 
                213(a)(2).''
            (2) Conforming amendment.--Paragraph (2) of section 1324(b) 
        of title 31, United States Code, is amended by inserting before 
        the period ``or from section 35 of such Code''.
            (3) Clerical amendment.--The table of sections for subpart 
        C of part IV of subchapter A of chapter 1 of such Code is 
        amended by striking the item relating to section 35 and 
        inserting the following:

                              ``Sec. 35. FICA taxes on amounts used to 
                                        pay for purchase of health plan 
                                        coverage and to make 
                                        contributions to medical 
                                        savings accounts.
                              ``Sec. 36. Overpayments of tax.''
    (f) Conforming Amendment.--Section 162 of such Code is amended by 
striking subsection (l).
    (g) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1994.

                  TITLE III--MEDICAL SAVINGS ACCOUNTS

SEC. 301. MEDICAL SAVINGS ACCOUNTS.

    (a) In General.--Chapter 77 of the Internal Revenue Code of 1986 is 
amended by adding at the end the following new section:

``SEC. 7524. MEDICAL SAVINGS ACCOUNTS.

    ``(a) Medical Savings Accounts.--For purposes of this title--
            ``(1) Medical savings account.--
                    ``(A) In general.--The term `medical savings 
                account' means a trust created or organized in the 
                United States exclusively for the purpose of paying the 
                medical expenses of the beneficiaries of such trust, 
                but only if the written governing instrument creating 
                the trust meets the following requirements:
                            ``(i) Except in the case of a rollover 
                        contribution described in subsection (b)(4), no 
                        contribution will be accepted unless it is in 
                        cash, and contributions will not be accepted in 
                        excess of the amount allowed as a deduction 
                        under section 213(a)(2) for the taxable year.
                            ``(ii) The trustee is a bank (as defined in 
                        section 408(n)) or another person who 
                        demonstrates to the satisfaction of the 
                        Secretary that the manner in which such person 
                        will administer the trust will be consistent 
                        with the requirements of this section.
                            ``(iii) No part of the trust assets will be 
                        invested in life insurance contracts.
                            ``(iv) The assets of the trust will not be 
                        commingled with other property except in a 
                        common trust fund or common investment fund.
                            ``(v) The interest of an individual in the 
                        balance in his account is nonforfeitable.
                            ``(vi) Under regulations prescribed by the 
                        Secretary, rules similar to the rules of 
                        section 401(a)(9) shall apply to the 
                        distribution of the entire interest of 
                        beneficiaries of such trust.
                    ``(B) Treatment of comparable accounts held by 
                insurance companies.--For purposes of this section, an 
                account held by an insurance company in the United 
                States shall be treated as a medical savings account 
                (and such company shall be treated as a bank) if--
                            ``(i) such account is part of a health 
                        insurance plan that includes a catastrophic 
                        health plan (as defined in section 213(f)(4)),
                            ``(ii) such account is exclusively for the 
                        purpose of paying the medical expenses of the 
                        beneficiaries of such account who are covered 
                        under such catastrophic health plan, and
                            ``(iii) the written instrument governing 
                        the account meets the requirements of clauses 
                        (i), (v), and (vi) of subparagraph (A).
            ``(2) Medical expenses.--The term `medical expenses' means, 
        with respect to an individual, amounts paid or incurred by such 
        individual for--
                    ``(A) medical care (as defined in section 213), or
                    ``(B) long-term care (as defined in paragraph (3)),
        for such individual, the spouse of such individual, and any 
        dependent (as defined in section 152) of such individual, but 
        only to the extent such amounts are not compensated for by 
        insurance or otherwise.
            ``(3) Long-term care.--
                    ``(A) In general.--The term `long-term care' means 
                diagnostic, preventive, therapeutic, rehabilitative, 
                maintenance, or personal care services which are 
                required by, and provided to, a chronically ill 
                individual, which have as their primary purpose the 
                direct provision of needed assistance with 1 or more 
                activities of daily living (or the alleviation of the 
                conditions necessitating such assistance) that the 
                individual is certified under subparagraph (B) as being 
                unable to perform, and which are provided in a setting 
                other than an acute care unit of a hospital pursuant to 
                a continuing plan of care prescribed by a physician or 
                registered professional nurse. Such term does not 
                include food or lodging provided in an institutional or 
                other setting, or basic living services associated with 
                the maintenance of a household or participation in 
                community life, such as case management, transportation 
                or legal services, or the performance of home 
                maintenance or household chores.
                    ``(B) Chronically ill individual.--The term 
                `chronically ill individual' means an individual who is 
                certified by a physician or registered professional 
                nurse as being unable to perform at least 3 activities 
                of daily living without substantial assistance from 
                another individual. For purposes of this paragraph, the 
                term `activities of daily living' means bathing, 
                dressing, eating, toileting, transferring, and walking.
            ``(4) Time when contributions deemed made.--A contribution 
        shall be deemed to be made on the last day of the preceding 
        taxable year if the contribution is made on account of such 
        taxable year and is made not later than the time prescribed by 
        law for filing the return for such taxable year (not including 
        extensions thereof).
    ``(b) Tax Treatment of Distributions.--
            ``(1) In general.--Any amount paid or distributed out of a 
        medical savings account shall be included in the gross income 
        of the individual for whose benefit such account was 
        established unless such amount is used exclusively to pay the 
        medical expenses of such individual.
            ``(2) Excess contributions returned before due date of 
        return.--Paragraph (1) shall not apply to the distribution of 
        any contribution paid during a taxable year to a medical 
        savings account to the extent that such contribution exceeds 
        the amount allowable as a deduction under section 213(a)(2) 
        if--
                    ``(A) such distribution is received by the 
                individual on or before the last day prescribed by law 
                (including extensions of time) for filing such 
                individual's return for such taxable year, and
                    ``(B) such distribution is accompanied by the 
                amount of net income attributable to such excess 
                contribution.
        Any net income described in subparagraph (B) shall be included 
        in the gross income of the individual for the taxable year in 
        which it is received.
            ``(3) Penalty for distributions not used for medical 
        expenses.--
                    ``(A) In general.--The tax imposed by chapter 1 for 
                any taxable year in which there is a payment or 
                distribution from a medical savings account which is 
                not used to pay the medical expenses of the individual 
                for whose benefit the account was established shall be 
                increased by 10 percent of the amount of such payment 
                or distribution which is includible in gross income 
                under paragraph (1).
                    ``(B) Account balance limitation.--If--
                            ``(i) the tax imposed by this chapter is 
                        required to be increased under subparagraph (A) 
                        by reason of a distribution, and
                            ``(ii) after such distribution, the 
                        aggregate balance of all medical savings 
                        accounts established for the benefit of the 
                        individual, is less than the amount of the 
                        deductible under the catastrophic health plan 
                        covering such individual,
                subparagraph (A) shall be applied by substituting `50 
                percent' for `10 percent'.
            ``(4) Rollovers.--Paragraph (1) shall not apply to any 
        amount paid or distributed out of a medical savings account to 
        the individual for whose benefit the account is maintained if 
        the entire amount received (including money and any other 
        property) is paid into another medical savings account for the 
        benefit of such individual not later than the 60th day after 
        the day on which he received the payment or distribution.
            ``(5) Penalty for mandatory distributions not made from 
        account.--
                    ``(A) In general.--If during any taxable year--
                            ``(i) there is a payment of a mandatory 
                        distribution expense incurred by a beneficiary 
                        of a medical savings account, and
                            ``(ii) the person making such payment is 
                        not reimbursed for such payment with a 
                        distribution from such account before the 60th 
                        day after such payment,
                the taxpayer's tax imposed by this chapter for such 
                taxable year shall be increased by 100 percent of the 
                excess of the amount of such payment over the amount of 
                reimbursement made before such 60th day.
                    ``(B) Mandatory distribution expense.--For purposes 
                of subparagraph (A), the term `mandatory distribution 
                expense' means any expense incurred which may be 
                counted towards a deductible, or for a copayment or 
                coinsurance, under the catastrophic health plan 
                covering such beneficiary.
    ``(c) Tax Treatment of Accounts.--
            ``(1) Exemption from tax.--Any medical savings account is 
        exempt from taxation under this subtitle unless such account 
        has ceased to be a medical savings account by reason of 
        paragraph (2) or (3). Notwithstanding the preceding sentence, 
        any such account shall be subject to the taxes imposed by 
        section 511 (relating to imposition of tax on unrelated 
        business income of charitable, etc. organizations).
            ``(2) Account terminates if individual engages in 
        prohibited transaction.--
                    ``(A) In general.--If, during any taxable year of 
                the individual for whose benefit the medical savings 
                account was established, such individual engages in any 
                transaction prohibited by section 4975 with respect to 
                the account, the account ceases to be a medical savings 
                account as of the first day of that taxable year.
                    ``(B) Account treated as distributing all its 
                assets.--In any case in which any account ceases to be 
                a medical savings account by reason of subparagraph (A) 
                on the first day of any taxable year, paragraph (1) of 
                subsection (b) shall be applied as if there were a 
                distribution on such first day in an amount equal to 
                the fair market value (on such first day) of all assets 
                in the account (on such first day) and no portion of 
                such distribution were used to pay medical expenses.
            ``(3) Effect of pledging account as security.--If, during 
        any taxable year, the individual for whose benefit a medical 
        savings account was established uses the account or any portion 
        thereof as security for a loan, the portion so used is treated 
        as distributed to that individual and not used to pay medical 
        expenses.
    ``(d) Custodial Accounts.--For purposes of this section, a 
custodial account shall be treated as a trust if--
            ``(1) the assets of such account are held by a bank (as 
        defined in section 408(n)) or another person who demonstrates 
        to the satisfaction of the Secretary that the manner in which 
        he will administer the account will be consistent with the 
        requirements of this section, and
            ``(2) the custodial account would, except for the fact that 
        it is not a trust, constitute a medical savings account 
        described in subsection (a).
For purposes of this title, in the case of a custodial account treated 
as a trust by reason of the preceding sentence, the custodian of such 
account shall be treated as the trustee thereof.
    ``(e) Reports.--The trustee of a medical savings account shall make 
such reports regarding such account to the Secretary and to the 
individual for whose benefit the account is maintained with respect to 
contributions, distributions, and such other matters as the Secretary 
may require under regulations. The reports required by this subsection 
shall be filed at such time and in such manner and furnished to such 
individuals at such time and in such manner as may be required by those 
regulations.''
    (b) Tax on Excess Contributions.--Section 4973 of such Code 
(relating to tax on excess contributions to individual retirement 
accounts, certain section 403(b) contracts, and certain individual 
retirement annuities) is amended--
            (1) by inserting ``medical savings accounts,'' after 
        ``accounts,'' in the heading of such section,
            (2) by redesignating paragraph (2) of subsection (a) as 
        paragraph (3) and by inserting after paragraph (1) the 
        following:
            ``(2) a medical savings account (within the meaning of 
        section 7524(a)),'',
            (3) by striking ``or'' at the end of paragraph (1) of 
        subsection (a), and
            (4) by adding at the end thereof the following new 
        subsection:
    ``(d) Excess Contributions to Medical Savings Accounts.--For 
purposes of this section, in the case of a medical savings account 
(within the meaning of section 7524(a)), the term `excess 
contributions' means the amount by which the amount contributed for the 
taxable year to the account exceeds the amount allowable as a deduction 
under section 213(a)(2) for such taxable year. For purposes of this 
subsection, any contribution which is distributed out of the medical 
savings account in a distribution to which section 7524(b)(2) applies 
shall be treated as an amount not contributed.''
    (c) Tax on Prohibited Transactions.--Section 4975 of such Code 
(relating to prohibited transactions) is amended--
            (1) by adding at the end of subsection (c) the following 
        new paragraph:
            ``(4) Special rule for medical savings accounts.--An 
        individual for whose benefit a medical savings account (within 
        the meaning of section 7524(a)) is established shall be exempt 
        from the tax imposed by this section with respect to any 
        transaction concerning such account (which would otherwise be 
        taxable under this section) if, with respect to such 
        transaction, the account ceases to be a medical savings account 
        by reason of the application of section 7524(b)(2)(A) to such 
        account.'', and
            (2) by inserting ``or a medical savings account described 
        in section 7524(a)'' in subsection (e)(1) after ``described in 
        section 408(a)''.
    (d) Failure To Provide Reports on Medical Savings Accounts.--
Section 6693 of such Code (relating to failure to provide reports on 
individual retirement account or annuities) is amended--
            (1) by inserting ``or on medical savings accounts'' after 
        ``annuities'' in the heading of such section, and
            (2) by adding at the end of subsection (a) the following: 
        ``The person required by section 7524(e) to file a report 
        regarding a medical savings account at the time and in the 
        manner required by such section shall pay a penalty of $50 for 
        each failure unless it is shown that such failure is due to 
        reasonable cause.''
    (e) Clerical Amendments.--
            (1) The table of sections for chapter 77 of such Code is 
        amended by adding at the end the following:

                              ``Sec. 7524. Medical savings accounts.''
            (2) The table of sections for chapter 43 of such Code is 
        amended by striking the item relating to section 4973 and 
        inserting the following:

                              ``Sec. 4973. Tax on excess contributions 
                                        to individual retirement 
                                        accounts, medical savings 
                                        accounts, certain 403(b) 
                                        contracts, and certain 
                                        individual retirement 
                                        annuities.''
            (3) The table of sections for subchapter B of chapter 68 of 
        such Code is amended by inserting ``or on medical savings 
        accounts'' after ``annuities'' in the item relating to section 
        6693.
    (f) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1994.

                     TITLE IV--MEDICAL MALPRACTICE

SEC. 401. APPLICABILITY AND PREEMPTION.

    (a) Applicability.--This title shall apply with respect to any 
medical malpractice liability claim and to any medical malpractice 
liability action brought in any State or Federal court, except that 
this title shall not apply to a claim or action for damages arising 
from a vaccine-related injury or death to the extent that title XXI of 
the Public Health Service Act applies to the claim or action.
    (b) Preemption.--
            (1) In general.--The provisions of this title shall preempt 
        any State or local law to the extent such law is inconsistent 
        with the limitations contained in such provisions. The 
        provisions of this title shall not preempt any State law that 
        provides for defenses or places limitations on a person's 
        liability in addition to those contained in this title, places 
        greater limitations on the amount of attorneys' fees and 
        expenses that can be collected, or otherwise imposes greater 
        restrictions than those provided in this title.
            (2) Negotiated liability.--The provisions of this title 
        shall preempt any Federal, State or local law to the extent 
        that such law prohibits a health care provider and a purchaser 
        of health care from voluntarily entering into a contractual 
        agreement in which the provider offers reduced fees for medical 
        services in exchange for a prearranged limit on the amount of 
        any award in a medical malpractice liability action resulting 
        from the provision of such services or a limit on the cause of 
        action that may be maintained with respect to such services.
    (c) Effect on Sovereign Immunity and Choice of Law or Venue.--
Nothing in subsection (b) shall be construed to--
            (1) waive or affect any defense of sovereign immunity 
        asserted by any State under any provision of law;
            (2) waive or affect any defense of sovereign immunity 
        asserted by the United States;
            (3) affect the applicability of any provision of the 
        Foreign Sovereign Immunities Act of 1976;
            (4) preempt State choice-of-law rules with respect to 
        claims brought by a foreign nation or a citizen of a foreign 
        nation; or
            (5) affect the right of any court to transfer venue or to 
        apply the law of a foreign nation or to dismiss a claim of a 
        foreign nation or of a citizen of a foreign nation on the 
        ground of inconvenient forum.
    (d) Federal Court Jurisdiction Not Established on Federal Question 
Grounds.--Nothing in this title shall be construed to establish any 
jurisdiction in the district courts of the United States over medical 
malpractice liability actions on the basis of section 1331 or 1337 of 
title 28, United States Code.

SEC. 402. STATUTE OF LIMITATIONS.

    (a) In General.--Except as provided in subsection (b), no medical 
malpractice liability action shall be initiated after the expiration of 
the 2-year period that begins on the later of the date that the alleged 
injury that is the subject of the claim was discovered, or the date on 
which such injury should reasonably have been discovered. In no event 
shall any such action be initiated after the expiration of the 4-year 
period that begins on the date on which the alleged injury occurred.
    (b) Exception for Certain Minors.--In the case of an alleged injury 
suffered by a minor who has not attained 6 years of age, no medical 
malpractice liability action shall be initiated after the expiration of 
the 2-year period that begins on the date on which the alleged injury 
was discovered, or the date on which such injury should reasonably have 
been discovered. In no event shall any such action be initiated after 
the expiration of the 4-year period that begins on the date on which 
the alleged injury occurred, or the date on which the minor attains 8 
years of age, whichever is later.

SEC. 403. SCOPE OF LIABILITY.

    (a) In General.--With respect to economic and noneconomic damages, 
the liability of each defendant in a medical malpractice liability 
action shall be several only and may not be joint. Such a defendant 
shall be liable only for the amount of economic or noneconomic damages 
allocated to the defendant in direct proportion to such defendant's 
percentage of fault or responsibility for the injury suffered by the 
claimant.
    (b) Determination of Percentage of Liability.--The trier of fact in 
a medical malpractice liability action shall determine the extent of 
each defendant's fault or responsibility for the economic or 
noneconomic damages suffered by the claimant, and shall assign a 
percentage of responsibility for such injury to each such defendant.

SEC. 404. LIMITATION ON NONECONOMIC DAMAGES.

    The total amount of noneconomic damages that may be awarded to a 
claimant and the members of the claimant's family for losses resulting 
from the injury which is the subject of a medical malpractice liability 
action may not exceed $250,000, regardless of the number of parties 
against whom the action is brought or the number of actions brought 
with respect to such injury.

SEC. 405. TREATMENT OF PAYMENTS FOR FUTURE ECONOMIC LOSSES.

    (a) Prohibiting Single Lump-Sum Payment.--In any medical 
malpractice liability action in which the damages awarded for any 
economic losses to be incurred after the date on which the judgment is 
entered exceeds $100,000, a defendant may not be required to pay such 
damages in a single, lump-sum payment, but shall be permitted to make 
such payments periodically based on projections of the amount of 
damages expected to be incurred by the claimant at appropriate 
intervals, as determined by the court.
    (b) Use of Annuities or Trusts.--The court may require that a 
defendant in a medical malpractice liability action purchase an annuity 
or fund a reversionary trust to make periodic payments under subsection 
as provided for in subsection (a) if the court determines that a 
reasonable basis exists for concluding that the defendant may be unable 
or otherwise fail to make the required periodic payments.
    (c) Requirement of Periodic Payment as Final Order.--A judgment of 
a court awarding periodic payments under this section may not be 
reopened at any time to contest, amend, or modify the schedule or 
amount of the payments in the absence of fraud or any other basis under 
which a party may obtain relief from a final judgment.

SEC. 406. TREATMENT OF COSTS AND ATTORNEY'S FEES.

    (a) Court Discretion.--A court in a medical malpractice liability 
action may, as a condition of the initiation of such an action, require 
an undertaking for the payment of the costs associated with such 
action, including reasonable attorneys' fees.
    (b) Payment of Costs.--If a judgment in a medical malpractice 
liability action is rendered against a party to such action, upon a 
motion by the prevailing party to such action, the court shall require 
the party against whom the judgment was rendered to pay to such 
prevailing party the costs and fees incurred by such prevailing party 
under the action, including reasonable attorneys' fees and other 
expenses. The court may waive the application of this paragraph if the 
court finds that the position maintained by the party against whom such 
judgment was rendered under such action was substantially justified or 
that special circumstances make such an award unjust.
    (c) Application for Recovery of Costs.--A party to a medical 
malpractice liability action who is seeking an award of costs and fees 
as provided for in subsection (b) shall, not later than 30 days after 
the date on which the final, nonappealable judgment in entered with 
respect to such action, submit to the appropriate court an application 
for the recovery of costs and fees. Such application shall contain--
            (1) a certification that the submitting party is a 
        prevailing party and is eligible to receive costs and fees 
        under subsection (b);
            (2) a description of the amount of costs and fees sought, 
        including an itemized statement from any attorney or expert 
        witness representing or appearing on behalf of such party 
        stating the actual time expended and the rate at which fees and 
        other expenses were computed; and
            (3) a description of the reasons why the position of the 
        party against whom the judgment was rendered was not 
        substantially justified.
In determining whether or not the position of the nonprevailing party 
was substantially justified the court shall consider only the record 
presented in the action maintained for the costs and fees.
    (d) Amount of Award.--In making a decision on an application 
submitted under subsection (c), the court may--
            (1) assess the amount to be awarded under this section 
        against the party against whom the judgment was rendered or 
        against the attorney (or attorneys) of such party; and
            (2) reduce the amount to be awarded pursuant to this 
        section, or deny an award, to the extent that the prevailing 
        party, during the course of the proceedings, engaged in conduct 
        which unnecessarily and unreasonably lengthened the time for, 
        or increased the costs of, the final resolution of the matter 
        in controversy.

SEC. 407. COLLATERAL SOURCES.

    (a) In General.--The total amount of damages received by a claimant 
in a medical malpractice liability action shall be reduced, in 
accordance with subsection (b), by any other payment that has been 
made, or that will be made, to such claimant to compensate such 
claimant for an injury that was part of such action, including 
payments--
            (1) under Federal or State disability or sickness programs;
            (2) under Federal, State, or private health insurance 
        programs;
            (3) under private disability insurance programs;
            (4) under employer wage continuation programs; and
            (5) from any other source that are intended to compensate 
        such claimant for such injury.
    (b) Amount of Reduction.--The amount by which an award of damages 
to a claimant for an injury shall be reduced under subsection (a) shall 
be--
            (1) the total amount of any payments (other than such 
        award) that have been made, or that will be made, to such 
        claimant to compensate such claimant for such injury; and
            (2) the amount paid by such claimant (or by the spouse, 
        parent, or legal guardian of such claimant) to secure the 
        payments described in paragraph (1).

SEC. 408. DAMAGES RELATING TO MEDICAL PRODUCT LIABILITY CLAIMS.

    (a) In General.--Noneconomic damages may not be awarded with 
respect to any medical product liability claim alleged against a 
medical product producer if--
            (1) the drug or device that is the subject of such claim--
                    (A) was subject to approval under section 505, or 
                premarket approval under section 515, of the Federal 
                Food, Drug, and Cosmetic Act by the Food and Drug 
                Administration with respect to--
                            (i) the safety of the formulation or 
                        performance of the aspect of the drug or 
                        device; or
                            (ii) the adequacy of the packaging or 
                        labeling of the drug or device, and
                    (B) was approved by the Food and Drug 
                Administration; or
            (2) the drug or device is generally recognized as safe and 
        effective pursuant to conditions established by the Food and 
        Drug Administration and applicable regulations, including 
        packaging and labeling regulations.
    (b) Exception in Case of Withheld Information, Misrepresentation, 
or Illegal Payment.--The provisions of subsection (a) shall not apply 
if it is determined on the basis of clear and convincing evidence that 
the medical product producer--
            (1) withheld from or misrepresented to the Food and Drug 
        Administration information concerning such drug or device that 
        is required to be submitted under the Federal Food, Drug, and 
        Cosmetic Act or section 352 of the Public Health Service Act 
        and that is material and relevant to the action involved; or
            (2) made an illegal payment to an official of the Food and 
        Drug Administration for the purpose of securing approval of the 
        drug or device.
    (c) Definition.--As used in this section, the term ``clear and 
convincing evidence'' is that measure or degree of proof that will 
produce in the mind of the trier of fact a firm belief or conviction as 
to the truth of the allegations sought to be established, except that 
such measure or degree of proof is more than that required under 
preponderance of the evidence, but less than that required for proof 
beyond a reasonable doubt.

SEC. 409. DEFINITIONS.

            (1) Claimant.--The term ``claimant'' means any person who 
        alleges a medical malpractice liability claim, and any person 
        on whose behalf such a claim is alleged, including the decedent 
        in the case of an action brought through or on behalf of an 
        estate.
            (2) Commercial loss.--The term ``commercial loss'' means 
        loss, including damage to the product itself, which is not harm 
        described in subparagraph (A) or (B) of paragraph (5), and 
        which is of a kind for which there is a remedy under applicable 
        contract or commercial law.
            (3) Economic damages.--The term ``economic damages'' means 
        damages paid to compensate an individual for hospital and other 
        medical expenses, lost wages, lost employment, and other 
        pecuniary losses.
            (4) Health care professional.--The term ``health care 
        professional'' means any individual who provides health care 
        services in a State and who is required by the laws or 
        regulations of the State to be licensed or certified by the 
        State to provide such services in the State.
            (5) Harm.--The term ``harm'' means--
                    (A) the personal physical illness, injury, or death 
                of a claimant;
                    (B) the mental anguish or emotional harm of a 
                claimant that is caused by or causing the claimant 
                personal physical illness or injury; or
                    (C) the physical damage caused by a medical product 
                to property other than the medical product itself.
        Such term does not include commercial loss or loss or damage to 
        a medical product.
            (6) Health care provider.--The term ``health care 
        provider'' means any organization or institution that is 
        engaged in the delivery of health care services in a State and 
        that is required by the laws or regulations of the State to be 
        licensed or certified by the State to engage in the delivery of 
        such services in the State.
            (7) Injury.--The term ``injury'' means any illness, 
        disease, or other harm that is the subject of a medical 
        malpractice liability action or a medical malpractice liability 
        claim.
            (8) Medical malpractice liability action.--The term 
        ``medical malpractice liability action'' means a civil action 
        brought in a State or Federal court against a health care 
        provider or health care professional in which the plaintiff 
        alleges a medical malpractice liability claim, but does not 
        include any action in which the plaintiff's sole allegation is 
        an allegation of an intentional tort.
            (9) Medical malpractice liability claim.--The term 
        ``medical malpractice liability claim'' means a claim in which 
        the claimant alleges that injury was caused by the provision of 
        (or the failure to provide) health care services or the use of 
        a medical product.
            (10) Medical product.--
                    (A) In general.--The term ``medical product'' 
                means, with respect to the allegation of a claimant, 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 the 
                Federal Food, Drug, and Cosmetic Act (21 U.S.C. 321(h)) 
                if--
                            (i) such drug or device was subject to 
                        premarket approval under section 505, 507, or 
                        515 of the Federal Food, Drug, and Cosmetic Act 
                        (21 U.S.C. 355, 357, or 360e) or section 351 of 
                        the Public Health Service Act (42 U.S.C. 262) 
                        with respect to the safety of the formulation 
                        or performance of the aspect of such drug or 
                        device which is the subject of the claimant's 
                        allegation or the adequacy of the packaging or 
                        labeling of such drug or device, and such drug 
                        or device is approved by the Food and Drug 
                        Administration; or
                            (ii) the drug or device is generally 
                        recognized as safe and effective under 
                        regulations issued by the Secretary of Health 
                        and Human Services under section 201(p) of the 
                        Federal Food, Drug, and Cosmetic Act (21 U.S.C. 
                        321(p)).
                    (B) Exception in case of misrepresentation or 
                fraud.--Notwithstanding subparagraph (A), the term 
                ``medical product'' shall not include any product 
                described in such subparagraph if the claimant shows 
                that the product is approved by the Food and Drug 
                Administration for marketing as a result of withheld 
                information, misrepresentation, or an illegal payment 
                by manufacturer of the product.
            (11) Noneconomic damages.--The term ``noneconomic damages'' 
        means damages paid to compensate an individual for losses for 
        physical and emotional pain, suffering, inconvenience, physical 
        impairment, mental anguish, emotional distress, disfigurement, 
        loss of enjoyment of life, loss of society and companionship, 
        loss of consortium, injury to reputation, humiliation, and 
        other noneconomic injury.
            (12) Person.--The term ``person'' means any individual, 
        corporation, company, association, firm, partnership, society, 
        joint stock company, or any other entity, including any 
        governmental entity.

SEC. 410. EFFECTIVE DATE.

    This title shall apply to all medical malpractice liability actions 
commenced on or after the date of enactment of this Act.

                       TITLE V--ANTITRUST REFORM

SEC. 501. PUBLICATION OF ANTITRUST GUIDELINES ON ACTIVITIES OF HEALTH 
              PLANS.

    (a) In General.--The Attorney General shall provide for the 
development and publication of explicit guidelines on the application 
of antitrust laws to the activities of health plans. The guidelines 
shall be designed to facilitate the development and operation of plans, 
consistent with the antitrust laws.
    (b) Review Process.--The Attorney General shall establish a review 
process under which the administrator or sponsor of a health plan (or 
organization that proposes to administer or sponsor a health plan) may 
submit a request to Attorney General to obtain a prompt opinion (but in 
no event later than 90 days after the Attorney General receives the 
request) from the Department of Justice on the plan's conformity with 
the Federal antitrust laws.
    (c) Definitions.--In this section--
            (1) the term ``antitrust laws''--
                    (A) has the meaning given it in subsection (a) of 
                the first section of the Clayton Act (15 U.S.C. 12(a)), 
                except that such term includes section 5 of the Federal 
                Trade Commission Act (15 U.S.C. 45) to the extent such 
                section applies to unfair methods of competition, and
                    (B) includes any State law similar to the laws 
                referred to in subparagraph (A); and
            (2) the term ``health plan'' means any contract or 
        arrangement under which an entity bears all or part of the cost 
        of providing health care items and services, including a 
        hospital or medical expense incurred policy or certificate, 
        hospital or medical service plan contract, or health 
        maintenance subscriber contract, but does not include--
                    (A) coverage only for accident, dental, vision, 
                disability, or long term care, medicare supplemental 
                health insurance, or any combination thereof,
                    (B) coverage issued as a supplement to liability 
                insurance,
                    (C) workers' compensation or similar insurance, or
                    (D) automobile medical-payment insurance.

SEC. 502. ISSUANCE OF HEALTH CARE CERTIFICATES OF PUBLIC ADVANTAGE.

    (a) Issuance and Effect of Certificate.--The Attorney General, 
after consultation with the Secretary of Health and Human Services, 
shall issue in accordance with this section a certificate of public 
advantage to each eligible health care collaborative activity that 
complies with the requirements in effect under this section on or after 
the expiration of the 1-year period that begins on the date of the 
enactment of this Act (without regard to whether or not the Attorney 
General has promulgated regulations to carry out this section by such 
date). Such activity, and the parties to such activity, shall not be 
liable under any of the antitrust laws for conduct described in such 
certificate and engaged in by such activity if such conduct occurs 
while such certificate is in effect.
    (b) Requirements Applicable to Issuance of Certificates.--
            (1) Standards to be met.--The Attorney General shall issue 
        a certificate to an eligible health care collaborative activity 
        if the Attorney General finds that--
                    (A) the benefits that are likely to result from 
                carrying out the activity outweigh the reduction in 
                competition (if any) that is likely to result from the 
                activity, and
                    (B) such reduction in competition is reasonably 
                necessary to obtain such benefits.
            (2) Factors to be considered.--
                    (A) Weighing of benefits against reduction in 
                competition.--For purposes of making the finding 
                described in paragraph (1)(A), the Attorney General 
                shall consider whether the activity is likely--
                            (i) to maintain or to increase the quality 
                        of health care,
                            (ii) to increase access to health care,
                            (iii) to achieve cost efficiencies that 
                        will be passed on to health care consumers, 
                        such as economies of scale, reduced transaction 
                        costs, and reduced administrative costs,
                            (iv) to preserve the operation of health 
                        care facilities located in underserved 
                        geographical areas,
                            (v) to improve utilization of health care 
                        resources, and
                            (vi) to reduce inefficient health care 
                        resource duplication.
                    (B) Necessity of reduction in competition.--For 
                purposes of making the finding described in paragraph 
                (1)(B), the Attorney General shall consider the 
                availability of equally efficient, less restrictive 
                alternatives to achieve the benefits that are intended 
                to be achieved by carrying out the activity.
    (c) Establishment of Criteria and Procedures.--Subject to 
subsections (d) and (e), not later than 1 year after the date of the 
enactment of this Act, the Attorney General and the Secretary shall 
establish jointly by rule the criteria and procedures applicable to the 
issuance of certificates under subsection (a). The rules shall specify 
the form and content of the application to be submitted to the Attorney 
General to request a certificate, the information required to be 
submitted in support of such application, the procedures applicable to 
denying and to revoking a certificate, and the procedures applicable to 
the administrative appeal (if such appeal is authorized by rule) of the 
denial and the revocation of a certificate. Such information may 
include the terms of the health care collaborative activity (in the 
case of an activity in existence as of the time of the application) and 
implementation plan for the collaborative activity.
    (d) Eligible Health Care Collaborative Activity.--To be an eligible 
health care collaborative activity for purposes of this section, a 
health care collaborative activity shall submit to the Attorney General 
an application that complies with the rules in effect under subsection 
(c) and that includes--
            (1) an agreement by the parties to the activity that the 
        activity will not foreclose competition by entering into 
        contracts that prevent health care providers from providing 
        health care in competition with the activity,
            (2) an agreement that the activity will submit to the 
        Attorney General annually a report that describes the 
        operations of the activity and information regarding the impact 
        of the activity on health care and on competition in health 
        care, and
            (3) an agreement that the parties to the activity will 
        notify the Attorney General and the Secretary of the 
        termination of the activity not later than 30 days after such 
        termination occurs.
    (e) Review of Applications for Certificates.--Not later than 90 
days after an eligible health care collaborative activity submits to 
the Attorney General an application that complies with the rules in 
effect under subsection (c) and with subsection (d), the Attorney 
General shall issue or deny the issuance of such certificate. If, 
before the expiration of such 90-day period, the Attorney General fails 
to issue or deny the issuance of such certificate, the Attorney General 
shall be deemed to have issued such certificate.
    (f) Revocation of Certificate.--Whenever the Attorney General finds 
that a health care collaborative activity with respect to which a 
certificate is in effect does not meet the standards specified in 
subsection (b), the Attorney General shall revoke such certificate.
    (g) Written Reasons; Judicial Review.--
            (1) Denial and revocation of certificates.--If the Attorney 
        General denies an application for a certificate or revokes a 
        certificate, the Attorney General shall include in the notice 
        of denial or revocation a statement of the reasons relied upon 
        for the denial or revocation of such certificate.
            (2) Judicial review.--
                    (A) After administrative proceeding.--(i) If the 
                Attorney General denies an application submitted or 
                revokes a certificate issued under this section after 
                an opportunity for hearing on the record, then any 
                party to the health care collaborative activity 
                involved may commence a civil action, not later than 60 
                days after receiving notice of the denial or 
                revocation, in an appropriate district court of the 
                United States for review of the record of such denial 
                or revocation.
                    (ii) As part of the Attorney General's answer, the 
                Attorney General shall file in such court a certified 
                copy of the record on which such denial or revocation 
                is based. The findings of fact of the Attorney General 
                may be set aside only if found to be unsupported by 
                substantial evidence in such record taken as a whole.
                    (B) Denial or revocation without administrative 
                proceeding.--If the Attorney General denies an 
                application submitted or revokes a certificate issued 
                under this section without an opportunity for hearing 
                on the record, then any party to the health care 
                collaborative activity involved may commence a civil 
                action, not later than 60 days after receiving notice 
                of the denial or revocation, in an appropriate district 
                court of the United States for de novo review of such 
                denial or revocation.
    (h) Exemption.--A person shall not be liable under any of the 
antitrust laws for conduct necessary--
            (1) to prepare, agree to prepare, or attempt to agree to 
        prepare an application to request a certificate under this 
        section, or
            (2) to attempt to enter into any health care collaborative 
        activity with respect to which such a certificate is in effect.
    (i) Definitions.--In this section:
            (1) The term ``antitrust laws'' has the meaning given it in 
        section 501(c)(1).
            (2) The term ``certificate'' means a certificate of public 
        advantage authorized to be issued under subsection (a).
            (3) The term ``health care collaborative activity'' means 
        an agreement (whether existing or proposed) between 2 or more 
        providers of health care services that is entered into solely 
        for the purpose of sharing in the provision of health care 
        services and that involves substantial integration or financial 
        risk-sharing between the parties, but does not include the 
        exchanging of information, the entering into of any agreement, 
        or the engagement in any other conduct that is not reasonably 
        required to carry out such agreement.
            (4) The term ``health care services'' includes services 
        related to the delivery or administration of health care 
        services.
            (5) The term ``liable'' means liable for any civil or 
        criminal violation of the antitrust laws.
            (6) The term ``provider of health care services'' means any 
        individual or entity that is engaged in the delivery of health 
        care services in a State and that is required by State law or 
        regulation to be licensed or certified by the State to engage 
        in the delivery of such services in the State.

                     TITLE VI--CONSUMER INFORMATION

SEC. 601. REQUIREMENT FOR DISCLOSURE OF PRICES FOR HEALTH CARE 
              SERVICES.

    (a) In General.--Except as provided in subsection (b), each 
hospital, physician, or other provider of a health care item or service 
shall make available to an individual, before providing any health care 
item or service to the individual in the United States, a list of all 
applicable fees and charges for the item or service. In the case of 
provision of items and services for which the particular services to be 
provided are not readily determinable in advance, the health care 
provider may use such estimates as the Secretary of Health and Human 
Services may permit.
    (b) Exception for Emergencies.--Subsection (a) shall not apply in 
the case of emergency treatment and such other extenuating 
circumstances as the Secretary may provide by regulation.
    (c) Enforcement.--No individual shall be liable for payment for a 
health care item or service for which a disclosure is required under 
subsection (a), if the disclosure has not been substantially made in 
accordance with such subsection.
    (d) Deadline for Issuance of Regulations.--Not later than one year 
after the date of the enactment of this Act, the Secretary of Health 
and Human Services shall issue final regulations carrying out the 
requirements of this section.
    (e) Effective Date.--This section shall apply to items and services 
furnished on or after the date of issuance of final regulations under 
subsection (d).
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