II

104TH CONGRESS

1ST SESSION H. R. 1747

IN THE SENATE OF THE UNITED STATES

DECEMBER 13, 1995

Received

AN ACT

To amend the Public Health Service Act to permanently

extend and clarify malpractice coverage for health centers, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,
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1 SECTION 1. SHORT TITLE; REFERENCES.

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

3 ‘‘Federally Supported Health Centers Assistance Act of

4 1995’’.

5 (b) REFERENCES.—Except as otherwise expressly

6 provided, whenever in this Act an amendment or repeal

7 is expressed in terms of an amendment to, or repeal of,

8 a section or other provision, the reference shall be consid9 ered to be made to a section or other provision of the Pub10 lic Health Service Act.

11 SEC. 2. PERMANENT EXTENSION OF PROGRAM.

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

13 233(g)(3)) is amended by striking the last sentence.

14 (b) CONFORMING AMENDMENTS.—Section 224(k)

15 (42 U.S.C. 233(k)) is amended—

16 (1) in paragraph (1)(A)—

17 (A) by striking ‘‘For each of the fiscal

18 years 1993, 1994, and 1995’’ and inserting

19 ‘‘For each fiscal year’’; and

20 (B) by striking ‘‘(except’’ and all that fol21 lows through ‘‘thereafter)’’; and

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

23 the fiscal years 1993, 1994, and 1995’’ and insert24 ing ‘‘for each fiscal year’’.

25 SEC. 3. CLARIFICATION OF COVERAGE.

26 Section 224 (42 U.S.C. 233) is amended—
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1 (1) in subsection (g)(1), by striking ‘‘an entity

2 described in paragraph (4)’’ in the first sentence and

3 all that follows through ‘‘contractor’’ in the second

4 sentence and inserting the following: ‘‘an entity de5 scribed in paragraph (4), and any officer, governing

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

7 any contractor of such an entity who is a physician

8 or other licensed or certified health care practitioner

9 (subject to paragraph (5)), shall be deemed to be an

10 employee of the Public Health Service for a calendar

11 year that begins during a fiscal year for which a

12 transfer was made under subsection (k)(3) (subject

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

14 States for an entity described in paragraph (4) and

15 any officer, governing board member, employee, or

16 contractor’’; and

17 (2) in subsection (k)(3), by inserting ‘‘govern18 ing board member,’’ after ‘‘officer,’’.

19 SEC. 4. COVERAGE FOR SERVICES FURNISHED TO INDIVID20 UALS OTHER THAN CENTER PATIENTS.

21 Section 224(g)(1) (42 U.S.C. 233(g)) is amended—

22 (1) by redesignating paragraph (1) as para23 graph (1)(A); and

24 (2) by adding at the end thereof the following:
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1 ‘‘(B) The deeming of any entity or officer, governing

2 board member, employee, or contractor of the entity to

3 be an employee of the Public Health Service for purposes

4 of this section shall apply with respect to services pro5 vided—

6 ‘‘(i) to all patients of the entity, and

7 ‘‘(ii) subject to subparagraph (C), to individuals

8 who are not patients of the entity.

9 ‘‘(C) Subparagraph (B)(ii) applies to services pro10 vided to individuals who are not patients of an entity if

11 the Secretary determines, after reviewing an application

12 submitted under subparagraph (D), that the provision of

13 the services to such individuals—

14 ‘‘(i) benefits patients of the entity and general

15 populations that could be served by the entity

16 through community-wide intervention efforts within

17 the communities served by such entity;

18 ‘‘(ii) facilitates the provision of services to pa19 tients of the entity; or

20 ‘‘(iii) are otherwise required under an employ21 ment contract (or similar arrangement) between the

22 entity and an officer, governing board member, em23 ployee, or contractor of the entity.’’.
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1 SEC. 5. APPLICATION PROCESS.

2 (a) APPLICATION REQUIREMENT.—Section 224(g)(1)

3 (42 U.S.C. 233(g)(1)) (as amended by section 4) is fur4 ther amended—

5 (1) in subparagraph (A), by inserting after

6 ‘‘For purposes of this section’’ the following: ‘‘and

7 subject to the approval by the Secretary of an appli8 cation under subparagraph (D)’’; and

9 (2) by adding at the end thereof the following:

10 ‘‘(D) The Secretary may not under subparagraph (A)

11 deem an entity or an officer, governing board member, em12 ployee, or contractor of the entity to be an employee of

13 the Public Health Service for purposes of this section, and

14 may not apply such deeming to services described in sub15 paragraph (B)(ii), unless the entity has submitted an ap16 plication for such deeming to the Secretary in such form

17 and such manner as the Secretary shall prescribe. The ap18 plication shall contain detailed information, along with

19 supporting documentation, to verify that the entity, and

20 the officer, governing board member, employee, or con21 tractor of the entity, as the case may be, meets the re22 quirements of subparagraphs (B) and (C) of this para23 graph and that the entity meets the requirements of para24 graphs (1) through (4) of subsection (h).

25 ‘‘(E) The Secretary shall make a determination of

26 whether an entity or an officer, governing board member,
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1 employee, or contractor of the entity is deemed to be an

2 employee of the Public Health Service for purposes of this

3 section within 30 days after the receipt of an application

4 under subparagraph (D). The determination of the Sec5 retary that an entity or an officer, governing board mem6 ber, employee, or contractor of the entity is deemed to be

7 an employee of the Public Health Service for purposes of

8 this section shall apply for the period specified by the Sec9 retary under subparagraph (A).

10 ‘‘(F) Once the Secretary makes a determination that

11 an entity or an officer, governing board member, em12 ployee, or contractor of an entity is deemed to be an em13 ployee of the Public Health Service for purposes of this

14 section, the determination shall be final and binding upon

15 the Secretary and the Attorney General and other parties

16 to any civil action or proceeding. Except as provided in

17 subsection (i), the Secretary and the Attorney General

18 may not determine that the provision of services which are

19 the subject of such a determination are not covered under

20 this section.

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

22 (4) that has not submitted an application under subpara23 graph (D):

24 ‘‘(i) The Secretary may not consider the entity

25 in making estimates under subsection (k)(1).
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1 ‘‘(ii) This section does not affect any authority

2 of the entity to purchase medical malpractice liabil3 ity insurance coverage with Federal funds provided

4 to the entity under section 329, 330, 340, or 340A.

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

6 (4) for which an application under subparagraph (D) is

7 in effect, the entity may, through notifying the Secretary

8 in writing, elect to terminate the applicability of this sub9 section to the entity. With respect to such election by the

10 entity:

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

12 of the 30-day period beginning on the date on which

13 the entity submits such notification.

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

15 the applicability of this subsection to the entity and

16 each officer, governing board member, employee, and

17 contractor of the entity.

18 ‘‘(iii) Upon the effective date for the election,

19 clauses (i) and (ii) of subparagraph (G) apply to the

20 entity to the same extent and in the same manner

21 as such clauses apply to an entity that has not sub22 mitted an application under subparagraph (D).

23 ‘‘(iv) If after making the election the entity

24 submits an application under subparagraph (D), the

25 election does not preclude the Secretary from ap-
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1 proving the application (and thereby restoring the

2 applicability of this subsection to the entity and each

3 officer, governing board member, employee, and con4 tractor of the entity, subject to the provisions of this

5 subsection and the subsequent provisions of this sec6 tion.’’.

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

8 233(h)) is amended—

9 (1) in the matter preceding paragraph (1), by

10 striking ‘‘Notwithstanding’’ and all that follows

11 through ‘‘entity—’’ and inserting the following:

12 ‘‘The Secretary may not approve an application

13 under subsection (g)(1)(D) unless the Secretary de14 termines that the entity—’’; and

15 (2) by striking ‘‘has fully cooperated’’ in para16 graph (4) and inserting ‘‘will fully cooperate’’.

17 (c) DELAYED APPLICABILITY FOR CURRENT PAR18 TICIPANTS.—If, on the day before the date of the enact19 ment of this Act, an entity was deemed to be an employee

20 of the Public Health Service for purposes of section 224(g)

21 of the Public Health Service Act, the condition under

22 paragraph (1)(D) of such section (as added by subsection

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

24 respect to the entity does not apply until the expiration

25 of the 180-day period beginning on such date.
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1 SEC. 6. TIMELY RESPONSE TO FILING OF ACTION OR PRO2 CEEDING.

3 Section 224 (42 U.S.C. 233) is amended by adding

4 at the end thereof the following subsection:

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

6 State court against any entity described in subsection

7 (g)(4) or any officer, governing board member, employee,

8 or any contractor of such an entity for damages described

9 in subsection (a), the Attorney General, within 15 days

10 after being notified of such filing, shall make an appear11 ance in such court and advise such court as to whether

12 the Secretary has determined under subsections (g) and

13 (h), that such entity, officer, governing board member,

14 employee, or contractor of the entity is deemed to be an

15 employee of the Public Health Service for purposes of this

16 section with respect to the actions or omissions that are

17 the subject of such civil action or proceeding. Such advice

18 shall be deemed to satisfy the provisions of subsection (c)

19 that the Attorney General certify that an entity, officer,

20 governing board member, employee, or contractor of the

21 entity was acting within the scope of their employment or

22 responsibility.

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

24 court within the time period prescribed under paragraph

25 (1), upon petition of any entity or officer, governing board

26 member, employee, or contractor of the entity named, the
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1 civil action or proceeding shall be removed to the appro2 priate United States district court. The civil action or pro3 ceeding shall be stayed in such court until such court con4 ducts a hearing, and makes a determination, as to the ap5 propriate forum or procedure for the assertion of the claim

6 for damages described in subsection (a) and issues an

7 order consistent with such determination.’’.

8 SEC. 7. APPLICATION OF COVERAGE TO MANAGED CARE

9 PLANS.

10 Section 224 (42 U.S.C. 223) (as amended by section

11 6) is amended by adding at the end thereof the following

12 subsection:

13 ‘‘(m)(1) An entity or officer, governing board mem14 ber, employee, or contractor of an entity described in sub15 section (g)(1) shall, for purposes of this section, be deemed

16 to be an employee of the Public Health Service with re17 spect to services provided to individuals who are enrollees

18 of a managed care plan if the entity contracts with such

19 managed care plan for the provision of services.

20 ‘‘(2) Each managed care plan which enters into a

21 contract with an entity described in subsection (g)(4) shall

22 deem the entity and any officer, governing board member,

23 employee, or contractor of the entity as meeting whatever

24 malpractice coverage requirements such plan may require

25 of contracting providers for a calendar year if such entity
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1 or officer, governing board member, employee, or contrac2 tor of the entity has been deemed to be an employee of

3 the Public Health Service for purposes of this section for

4 such calendar year. Any plan which is found by the Sec5 retary on the record, after notice and an opportunity for

6 a full and fair hearing, to have violated this subsection

7 shall upon such finding cease, for a period to be deter8 mined by the Secretary, to receive and to be eligible to

9 receive any Federal funds under titles XVIII or XIX of

10 the Social Security Act.

11 ‘‘(3) For purposes of this subsection, the term ‘man12 aged care plan’ shall mean health maintenance organiza13 tions and similar entities that contract at-risk with payors

14 for the provision of health services or plan enrollees and

15 which contract with providers (such as entities described

16 in subsection (g)(4)) for the delivery of such services to

17 plan enrollees.’’.

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

19 CONTRACTS.

20 Section 224(g)(5)(B) (42 U.S.C. 223(g)(5)(B)) is

21 amended to read as follows:

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

performs an average of less than 321 23 ⁄2 hours of serv24 ices per week for the entity for the period of the con25 tract, the individual is a licensed or certified pro-
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1 vider of services in the fields of family practice, gen2 eral internal medicine, general pediatrics, or obstet3 rics and gynecology.’’.

4 SEC. 9. DUE PROCESS FOR LOSS OF COVERAGE.

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

6 by striking ‘‘may determine, after notice and opportunity

7 for a hearing’’ and inserting ‘‘may on the record deter8 mine, after notice and opportunity for a full and fair hear9 ing’’.

10 SEC. 10. AMOUNT OF RESERVE FUND.

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

12 by striking ‘‘$30,000,000’’ and inserting ‘‘$10,000,000’’.

13 SEC. 11. REPORT ON RISK EXPOSURE OF COVERED ENTI14 TIES.

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

16 by adding at the end thereof the following subsection:

17 ‘‘(n)(1) Not later than one year after the date of the

18 enactment of the Federally Supported Health Centers As19 sistance Act of 1995, the Comptroller General of the Unit20 ed States shall submit to the Congress a report on the

21 following:

22 ‘‘(A) The medical malpractice liability claims

23 experience of entities that have been deemed to be

24 employees for purposes of this section.

25 ‘‘(B) The risk exposure of such entities.
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1 ‘‘(C) The value of private sector risk-manage2 ment services, and the value of risk-management

3 services and procedures required as a condition of

4 receiving a grant under section 329, 330, 340, or

5 340A.

6 ‘‘(D) A comparison of the costs and the benefits

7 to taxpayers of maintaining medical malpractice li8 ability coverage for such entities pursuant to this

9 section, taking into account—

10 ‘‘(i) a comparison of the costs of premiums

11 paid by such entities for private medical mal12 practice liability insurance with the cost of cov13 erage pursuant to this section; and

14 ‘‘(ii) an analysis of whether the cost of pre15 miums for private medical malpractice liability

16 insurance coverage is consistent with the liabil17 ity claims experience of such entities.

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

19 following:

20 ‘‘(A) A comparison of—

21 ‘‘(i) an estimate of the aggregate amounts

22 that such entities (together with the officers,

23 governing board members, employees, and con24 tractors of such entities who have been deemed

25 to be employees for purposes of this section)
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1 would have directly or indirectly paid in pre2 miums to obtain medical malpractice liability

3 insurance coverage if this section were not in

4 effect; with

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

6 grants received by such entities under this Act

7 were reduced pursuant to subsection (k)(2).

8 ‘‘(B) A comparison of—

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

10 offered such insurance that such entities (to11 gether with the officers, governing board mem12 bers, employees, and contractors of such enti13 ties who have been deemed to be employees for

14 purposes of this section) purchased during the

15 three-year period beginning on January 1,

16 1993; with

17 ‘‘(ii) an estimate of the amount of such in18 surance that such entities (together with the of19 ficers, governing board members, employees,

20 and contractors of such entities who have been

21 deemed to be employees for purposes of this

22 section) will purchase after the date of the en23 actment of the Federally Supported Health

24 Centers Assistance Act of 1995.
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1 ‘‘(C) An estimate of the medical malpractice li2 ability loss history of such entities for the 10-year

3 period preceding October 1, 1996, including but not

4 limited to the following:

5 ‘‘(i) Claims that have been paid and that

6 are estimated to be paid, and legal expenses to

7 handle such claims that have been paid and

8 that are estimated to be paid, by the Federal

9 Government pursuant to deeming entities as

10 employees for purposes of this section.

11 ‘‘(ii) Claims that have been paid and that

12 are estimated to be paid, and legal expenses to

13 handle such claims that have been paid and

14 that are estimated to be paid, by private medi15 cal malpractice liability insurance.

16 ‘‘(D) An analysis of whether the cost of premiums

17 for private medical malpractice liability insurance

18 coverage is consistent with the liability claims experi19 ence of entities that have been deemed as employees

20 for purposes of this section.

21 ‘‘(3) In preparing the report under paragraph (1), the

22 Comptroller General of the United States shall consult
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1 with public and private entities with expertise on the mat2 ters with which the report is concerned.’’.

Passed the House of Representatives December 12,

1995.

Attest: ROBIN H. CARLE,

Clerk.