H. R. 1747

One Hundred Fourth Congress

of the

United States of America

AT THE FIRST SESSION

Begun and held at the City of Washington on Wednesday,

the fourth day of January, one thousand nine hundred and ninety-five

An Act

To amend the Public Health Service Act to permanently extend and clarify malpractice coverage for health centers, and for other purposes.

Be it enacted by the Senate and House of Representatives of

the United States of America in Congress assembled,

SECTION 1. SHORT TITLE; REFERENCES.

(a) SHORT TITLE.—This Act may be cited as the ‘‘Federally

Supported Health Centers Assistance Act of 1995’’.

(b) REFERENCES.—Except as otherwise expressly provided,

whenever in this Act an amendment or repeal is expressed in

terms of an amendment to, or repeal of, a section or other provision,

the reference shall be considered to be made to a section or other

provision of the Public Health Service Act.

SEC. 2. PERMANENT EXTENSION OF PROGRAM.

(a) IN GENERAL.—Section 224(g)(3) (42 U.S.C. 233(g)(3)) is

amended by striking the last sentence.

(b) CONFORMING AMENDMENTS.—Section 224(k) (42 U.S.C.

233(k)) is amended—

(1) in paragraph (1)(A)—

(A) by striking ‘‘For each of the fiscal years 1993,

1994, and 1995’’ and inserting ‘‘For each fiscal year’’; and

(B) by striking ‘‘(except’’ and all that follows through

‘‘thereafter)’’; and

(2) in paragraph (2), by striking ‘‘for each of the fiscal

years 1993, 1994, and 1995’’ and inserting ‘‘for each fiscal

year’’.

SEC. 3. CLARIFICATION OF COVERAGE.

Section 224 (42 U.S.C. 233) is amended—

(1) in subsection (g)(1), by striking ‘‘an entity described

in paragraph (4)’’ in the first sentence and all that follows

through ‘‘contractor’’ in the second sentence and inserting the

following: ‘‘an entity described in paragraph (4), and any officer,

governing board member, or employee of such an entity, and

any contractor of such an entity who is a physician or other

licensed or certified health care practitioner (subject to paragraph (5)), shall be deemed to be an employee of the Public

Health Service for a calendar year that begins during a fiscal

year for which a transfer was made under subsection (k)(3)

(subject to paragraph (3)). The remedy against the United

States for an entity described in paragraph (4) and any officer,

governing board member, employee, or contractor’’; and
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(2) in subsection (k)(3), by inserting ‘‘governing board mem- ber,’’ after ‘‘officer,’’.

SEC. 4. COVERAGE FOR SERVICES FURNISHED TO INDIVIDUALS OTHER

THAN CENTER PATIENTS.

Section 224(g)(1) (42 U.S.C. 233(g)) is amended— (1) by redesignating paragraph (1) as paragraph (1)(A); and

(2) by adding at the end thereof the following: ‘‘(B) The deeming of any entity or officer, governing board member, employee, or contractor of the entity to be an employee

of the Public Health Service for purposes of this section shall

apply with respect to services provided— ‘‘(i) to all patients of the entity, and

‘‘(ii) subject to subparagraph (C), to individuals who are not patients of the entity.

‘‘(C) Subparagraph (B)(ii) applies to services provided to individ- uals who are not patients of an entity if the Secretary determines,

after reviewing an application submitted under subparagraph (D),

that the provision of the services to such individuals— ‘‘(i) benefits patients of the entity and general populations that could be served by the entity through community-wide

intervention efforts within the communities served by such

entity; ‘‘(ii) facilitates the provision of services to patients of the

entity; or ‘‘(iii) are otherwise required under an employment contract (or similar arrangement) between the entity and an officer,

governing board member, employee, or contractor of the entity.’’.

SEC. 5. APPLICATION PROCESS.

(a) APPLICATION REQUIREMENT.—Section 224(g)(1) (42 U.S.C. 233(g)(1)) (as amended by section 4) is further amended— (1) in subparagraph (A), by inserting after ‘‘For purposes of this section’’ the following: ‘‘and subject to the approval

by the Secretary of an application under subparagraph (D)’’;

and

(2) by adding at the end thereof the following: ‘‘(D) The Secretary may not under subparagraph (A) deem an entity or an officer, governing board member, employee, or

contractor of the entity to be an employee of the Public Health

Service for purposes of this section, and may not apply such deeming

to services described in subparagraph (B)(ii), unless the entity has

submitted an application for such deeming to the Secretary in

such form and such manner as the Secretary shall prescribe. The

application shall contain detailed information, along with supporting documentation, to verify that the entity, and the officer, governing board member, employee, or contractor of the entity, as the

case may be, meets the requirements of subparagraphs (B) and

(C) of this paragraph and that the entity meets the requirements

of paragraphs (1) through (4) of subsection (h). ‘‘(E) The Secretary shall make a determination of whether

an entity or an officer, governing board member, employee, or

contractor of the entity is deemed to be an employee of the Public

Health Service for purposes of this section within 30 days after

the receipt of an application under subparagraph (D). The determination of the Secretary that an entity or an officer, governing

board member, employee, or contractor of the entity is deemed
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to be an employee of the Public Health Service for purposes of

this section shall apply for the period specified by the Secretary

under subparagraph (A).

‘‘(F) Once the Secretary makes a determination that an entity

or an officer, governing board member, employee, or contractor

of an entity is deemed to be an employee of the Public Health

Service for purposes of this section, the determination shall be

final and binding upon the Secretary and the Attorney General

and other parties to any civil action or proceeding. Except as provided in subsection (i), the Secretary and the Attorney General

may not determine that the provision of services which are the

subject of such a determination are not covered under this section.

‘‘(G) In the case of an entity described in paragraph (4) that

has not submitted an application under subparagraph (D):

‘‘(i) The Secretary may not consider the entity in making

estimates under subsection (k)(1).

‘‘(ii) This section does not affect any authority of the entity

to purchase medical malpractice liability insurance coverage

with Federal funds provided to the entity under section 329,

330, 340, or 340A.

‘‘(H) In the case of an entity described in paragraph (4) for

which an application under subparagraph (D) is in effect, the entity

may, through notifying the Secretary in writing, elect to terminate

the applicability of this subsection to the entity. With respect to

such election by the entity:

‘‘(i) The election is effective upon the expiration of the

30-day period beginning on the date on which the entity submits

such notification.

‘‘(ii) Upon taking effect, the election terminates the

applicability of this subsection to the entity and each officer,

governing board member, employee, and contractor of the

entity. ‘‘(iii) Upon the effective date for the election, clauses (i)

and (ii) of subparagraph (G) apply to the entity to the same

extent and in the same manner as such clauses apply to an

entity that has not submitted an application under subparagraph (D). ‘‘(iv) If after making the election the entity submits an application under subparagraph (D), the election does not preclude the Secretary from approving the application (and thereby

restoring the applicability of this subsection to the entity and

each officer, governing board member, employee, and contractor

of the entity, subject to the provisions of this subsection and

the subsequent provisions of this section.’’.

(b) APPROVAL PROCESS.—Section 224(h) (42 U.S.C. 233(h)) is

amended—

(1) in the matter preceding paragraph (1), by striking ‘‘Notwithstanding’’ and all that follows through ‘‘entity—’’ and

inserting the following: ‘‘The Secretary may not approve an

application under subsection (g)(1)(D) unless the Secretary

determines that the entity—’’; and

(2) by striking ‘‘has fully cooperated’’ in paragraph (4) and

inserting ‘‘will fully cooperate’’.

(c) DELAYED APPLICABILITY FOR CURRENT PARTICIPANTS.—If,

on the day before the date of the enactment of this Act, an entity

was deemed to be an employee of the Public Health Service for

purposes of section 224(g) of the Public Health Service Act, the
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condition under paragraph (1)(D) of such section (as added by

subsection (a) of this section) that an application be approved with

respect to the entity does not apply until the expiration of the

180-day period beginning on such date.

SEC. 6. TIMELY RESPONSE TO FILING OF ACTION OR PROCEEDING.

Section 224 (42 U.S.C. 233) is amended by adding at the end

thereof the following subsection:

‘‘(l)(1) If a civil action or proceeding is filed in a State court

against any entity described in subsection (g)(4) or any officer,

governing board member, employee, or any contractor of such an

entity for damages described in subsection (a), the Attorney General,

within 15 days after being notified of such filing, shall make an

appearance in such court and advise such court as to whether

the Secretary has determined under subsections (g) and (h), that

such entity, officer, governing board member, employee, or contractor of the entity is deemed to be an employee of the Public Health

Service for purposes of this section with respect to the actions

or omissions that are the subject of such civil action or proceeding.

Such advice shall be deemed to satisfy the provisions of subsection

(c) that the Attorney General certify that an entity, officer, governing board member, employee, or contractor of the entity was acting

within the scope of their employment or responsibility.

‘‘(2) If the Attorney General fails to appear in State court

within the time period prescribed under paragraph (1), upon petition

of any entity or officer, governing board member, employee, or

contractor of the entity named, the civil action or proceeding shall

be removed to the appropriate United States district court. The

civil action or proceeding shall be stayed in such court until such

court conducts a hearing, and makes a determination, as to the

appropriate forum or procedure for the assertion of the claim for

damages described in subsection (a) and issues an order consistent

with such determination.’’.

SEC. 7. APPLICATION OF COVERAGE TO MANAGED CARE PLANS.

Section 224 (42 U.S.C. 223) (as amended by section 6) is amended by adding at the end thereof the following subsection: ‘‘(m)(1) An entity or officer, governing board member, employee, or contractor of an entity described in subsection (g)(1) shall, for

purposes of this section, be deemed to be an employee of the

Public Health Service with respect to services provided to individuals who are enrollees of a managed care plan if the entity contracts

with such managed care plan for the provision of services. ‘‘(2) Each managed care plan which enters into a contract with an entity described in subsection (g)(4) shall deem the entity

and any officer, governing board member, employee, or contractor

of the entity as meeting whatever malpractice coverage requirements such plan may require of contracting providers for a calendar

year if such entity or officer, governing board member, employee,

or contractor of the entity has been deemed to be an employee

of the Public Health Service for purposes of this section for such

calendar year. Any plan which is found by the Secretary on the

record, after notice and an opportunity for a full and fair hearing,

to have violated this subsection shall upon such finding cease,

for a period to be determined by the Secretary, to receive and

to be eligible to receive any Federal funds under titles XVIII or

XIX of the Social Security Act.
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‘‘(3) For purposes of this subsection, the term ‘managed care

plan’ shall mean health maintenance organizations and similar

entities that contract at-risk with payors for the provision of health

services or plan enrollees and which contract with providers (such

as entities described in subsection (g)(4)) for the delivery of such

services to plan enrollees.’’.

SEC. 8. COVERAGE FOR PART-TIME PROVIDERS UNDER CONTRACTS.

Section 224(g)(5)(B) (42 U.S.C. 223(g)(5)(B)) is amended to read

as follows:

‘‘(B) in the case of an individual who normally performs

an average of less than 321⁄2 hours of services per week for

the entity for the period of the contract, the individual is

a licensed or certified provider of services in the fields of family

practice, general internal medicine, general pediatrics, or

obstetrics and gynecology.’’.

SEC. 9. DUE PROCESS FOR LOSS OF COVERAGE.

Section 224(i)(1) (42 U.S.C. 233(i)(1)) is amended by striking

‘‘may determine, after notice and opportunity for a hearing’’ and

inserting ‘‘may on the record determine, after notice and opportunity

for a full and fair hearing’’.

SEC. 10. AMOUNT OF RESERVE FUND.

Section 224(k)(2) (42 U.S.C. 223(k)(2)) is amended by striking

‘‘$30,000,000’’ and inserting ‘‘$10,000,000’’.

SEC. 11. REPORT ON RISK EXPOSURE OF COVERED ENTITIES.

Section 224 (as amended by section 7) is amended by adding

at the end thereof the following subsection: ‘‘(n)(1) Not later than one year after the date of the enactment

of the Federally Supported Health Centers Assistance Act of 1995,

the Comptroller General of the United States shall submit to the

Congress a report on the following: ‘‘(A) The medical malpractice liability claims experience

of entities that have been deemed to be employees for purposes

of this section.

‘‘(B) The risk exposure of such entities.

‘‘(C) The value of private sector risk-management services,

and the value of risk-management services and procedures

required as a condition of receiving a grant under section

329, 330, 340, or 340A.

‘‘(D) A comparison of the costs and the benefits to taxpayers

of maintaining medical malpractice liability coverage for such

entities pursuant to this section, taking into account— ‘‘(i) a comparison of the costs of premiums paid by

such entities for private medical malpractice liability insurance with the cost of coverage pursuant to this section;

and

‘‘(ii) an analysis of whether the cost of premiums for

private medical malpractice liability insurance coverage

is consistent with the liability claims experience of such

entities.

‘‘(2) The report under paragraph (1) shall include the following:

‘‘(A) A comparison of—

‘‘(i) an estimate of the aggregate amounts that such

entities (together with the officers, governing board members, employees, and contractors of such entities who have
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been deemed to be employees for purposes of this section)

would have directly or indirectly paid in premiums to obtain

medical malpractice liability insurance coverage if this section were not in effect; with

‘‘(ii) the aggregate amounts by which the grants

received by such entities under this Act were reduced

pursuant to subsection (k)(2).

‘‘(B) A comparison of—

‘‘(i) an estimate of the amount of privately offered

such insurance that such entities (together with the officers, governing board members, employees, and contractors

of such entities who have been deemed to be employees

for purposes of this section) purchased during the threeyear period beginning on January 1, 1993; with

‘‘(ii) an estimate of the amount of such insurance that

such entities (together with the officers, governing board

members, employees, and contractors of such entities who

have been deemed to be employees for purposes of this

section) will purchase after the date of the enactment of

the Federally Supported Health Centers Assistance Act

of 1995.

‘‘(C) An estimate of the medical malpractice liability loss

history of such entities for the 10-year period preceding October

1, 1996, including but not limited to the following:

‘‘(i) Claims that have been paid and that are estimated

to be paid, and legal expenses to handle such claims that

have been paid and that are estimated to be paid, by

the Federal Government pursuant to deeming entities as

employees for purposes of this section.

‘‘(ii) Claims that have been paid and that are estimated

to be paid, and legal expenses to handle such claims that

have been paid and that are estimated to be paid, by

private medical malpractice liability insurance.

‘‘(D) An analysis of whether the cost of premiums for private

medical malpractice liability insurance coverage is consistent

with the liability claims experience of entities that have been

deemed as employees for purposes of this section.

‘‘(3) In preparing the report under paragraph (1), the Comptroller General of the United States shall consult with public and
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private entities with expertise on the matters with which the report

is concerned.’’.

Speaker of the House of Representatives.

Vice President of the United States and

President of the Senate.