II 

111TH CONGRESS 

1ST SESSION S. 1324 

To ensure that every American has a health insurance plan that they can 

afford, own, and keep. 

IN THE SENATE OF THE UNITED STATES 

JUNE 23, 2009 

Mr. DEMINT introduced the following bill; which was read twice and referred 

to the Committee on Finance 

A BILL 

To ensure that every American has a health insurance plan 

that they can afford, own, and keep. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Health Care Freedom 

5 Act of 2009’’. 


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1 TITLE I—ACCESS TO COVERAGE 

2 FOR EVERY AMERICAN 

3 Subtitle A—Tax Code Equity 

4 SEC. 101. REFUNDABLE CREDIT FOR HEALTH INSURANCE 

5 COVERAGE. 

6 (a) IN GENERAL.—Subpart C of part IV of sub7 chapter A of chapter 1 of the Internal Revenue Code of 

8 1986 is amended by inserting after section 36A the fol9 lowing new section: 

10 ‘‘SEC. 36B. QUALIFIED HEALTH INSURANCE CREDIT. 

11 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in12 dividual, there shall be allowed as a credit against the tax 

13 imposed by this chapter for the taxable year so much of 

14 the qualified health insurance costs of the taxpayer as does 

15 not exceed the sum of the monthly limitations determined 

16 under subsection (b). 

17 ‘‘(b) MONTHLY LIMITATION.— 

18 ‘‘(1) IN GENERAL.—The monthly limitation for 

each month during the taxable year is 1 19 ⁄12th of— 

20 ‘‘(A) $2,000, in the case of an individual 

21 purchasing individual coverage for an eligible 

22 individual, and 

23 ‘‘(B) $5,000, in the case of an individual 

24 purchasing family coverage for 2 or more eligi25 ble individuals. 


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1 ‘‘(2) LIMITATION.—In no case shall the annual 

2 sum of the monthly limitations with respect to any 

3 taxpayer exceed $5,000. 

4 ‘‘(3) NO CREDIT FOR INELIGIBLE MONTHS.— 

5 With respect to any individual, the monthly limita6 tion shall be zero for any month for which such indi7 vidual is not an eligible individual. 

8 ‘‘(c) ELIGIBLE INDIVIDUAL.—For purposes of this 

9 section— 

10 ‘‘(1) IN GENERAL.—The term ‘eligible indi11 vidual’ means, with respect to any month, an indi12 vidual who— 

13 ‘‘(A) is the taxpayer, the taxpayer’s 

14 spouse, or the taxpayer’s dependent, 

15 ‘‘(B) is covered under qualified health in16 surance as of the 1st day of such month, and 

17 ‘‘(C) is not covered under employer-pro18 vided health insurance as of the 1st day of such 

19 month. 

20 ‘‘(2) COVERAGE UNDER MEDICARE, MEDICAID, 

21 SCHIP, MILITARY COVERAGE.—The term ‘eligible in22 dividual’ shall not include any individual for a month 

23 if, as of the first day of such month, such individual 

24 is— 


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1 ‘‘(A) entitled to benefits under part A of 

2 title XVIII of the Social Security Act or en3 rolled under part B of such title, and the indi4 vidual is not a participant or beneficiary in a 

5 group health plan or large group health plan 

6 that is a primary plan (as defined in section 

7 1862(b)(2)(A) of such Act), 

8 ‘‘(B) in the case of a State that has not 

9 made the election described in section 

10 1939(a)(1)(B) of the Social Security Act, en11 rolled in the program under title XIX of such 

12 Act (other than under section 1928 of such 

13 Act), or 

14 ‘‘(C) entitled to benefits under chapter 55 

15 of title 10, United States Code. 

16 ‘‘(3) IDENTIFICATION REQUIREMENTS.—The 

17 term ‘eligible individual’ shall not include any indi18 vidual for any month unless the policy number asso19 ciated with the qualified health insurance and the 

20 TIN of each eligible individual covered under such 

21 health insurance for such month are included on the 

22 return of tax for the taxable year in which such 

23 month occurs. 

24 ‘‘(4) PRISONERS.—The term ‘eligible individual’ 

25 shall not include any individual for a month if, as 


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1 of the first day of such month, such individual is im2 prisoned under Federal, State, or local authority. 

3 ‘‘(5) ALIENS.—The term ‘eligible individual’ 

4 shall not include any alien individual for a month if, 

5 as of the first day of such month, such individual is 

6 not a lawful permanent resident of the United 

7 States. 

8 ‘‘(d) QUALIFIED HEALTH INSURANCE COSTS.—For 

9 purposes of this section, the term ‘qualified health insur10 ance costs’ means the sum of the amounts paid during 

11 the taxable year to obtain qualified health insurance for 

12 1 or more eligible individuals. 

13 ‘‘(e) QUALIFIED HEALTH INSURANCE.—For pur14 poses of this section, the term ‘qualified health insurance’ 

15 includes a high deductible health plan within the meaning 

16 of section 223(c)(2), but shall not include any insurance 

17 if a substantial portion of its benefits are excepted benefits 

18 (as defined in section 9832(c)). 

19 ‘‘(f) OTHER DEFINITIONS.—For purposes of this sec20 tion— 

21 ‘‘(1) DEPENDENT.—The term ‘dependent’ has 

22 the meaning given such term by section 152 (deter23 mined without regard to subsections (b)(1), (b)(2), 

24 and (d)(1)(B) thereof). An individual who is a child 

25 to whom section 152(e) applies shall be treated as 


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1 a dependent of the custodial parent for a coverage 

2 month unless the custodial and noncustodial parent 

3 agree otherwise. 

4 ‘‘(2) CHILD.—The term ‘child’ means a quali5 fying child (as defined in section 152(c)). 

6 ‘‘(g) SPECIAL RULES.— 

7 ‘‘(1) COORDINATION WITH MEDICAL DEDUC8 TION, ETC.—Any amount paid by a taxpayer for in9 surance to which subsection (a) applies shall not be 

10 taken into account in computing the amount allow11 able to the taxpayer as a credit under section 35 or 

12 as a deduction under section 213(a). 

13 ‘‘(2) MEDICAL AND HEALTH SAVINGS AC14 COUNTS.—The amounts taken into account as quali15 fied health insurance costs for any taxable year shall 

16 be reduced by the aggregate amounts, if any, distrib17 uted from Archer MSAs (as defined in section 

18 220(d)) and health savings accounts (as defined in 

19 section 223(d)) which are excludable from gross in20 come for such taxable year by reason of being used 

21 to pay premiums for coverage of an individual under 

22 qualified health insurance for any month during 

23 such taxable year. 

24 ‘‘(3) DENIAL OF CREDIT TO DEPENDENTS.—No 

25 credit shall be allowed under this section to any indiVerDate Nov 24 2008 04:18 Jun 24, 2009 Jkt 079200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S1324.IS S1324

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1 vidual with respect to whom a deduction under sec2 tion 151 is allowable to another taxpayer for a tax3 able year beginning in the calendar year in which 

4 such individual’s taxable year begins. 

5 ‘‘(4) MARRIED COUPLES MUST FILE JOINT RE6 TURN.— 

7 ‘‘(A) IN GENERAL.—If the taxpayer is 

8 married at the close of the taxable year, the 

9 credit shall be allowed under subsection (a) only 

10 if the taxpayer and his spouse file a joint return 

11 for the taxable year. 

12 ‘‘(B) MARITAL STATUS; CERTAIN MARRIED

13 INDIVIDUALS LIVING APART.—Rules similar to 

14 the rules of paragraphs (3) and (4) of section 

15 21(e) shall apply for purposes of this para16 graph. 

17 ‘‘(5) VERIFICATION OF COVERAGE, ETC.—No 

18 credit shall be allowed under this section with re19 spect to any individual unless such individual’s cov20 erage (and such related information as the Secretary 

21 may require) is verified in such manner as the Sec22 retary may prescribe. 

23 ‘‘(6) INSURANCE WHICH COVERS OTHER INDI24 VIDUALS; TREATMENT OF PAYMENTS.—Rules similar 


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1 to the rules of paragraphs (7) and (8) of section 

2 35(g) shall apply for purposes of this section. 

3 ‘‘(7) PARTICIPANTS IN HEALTH CARE SHARING

4 MINISTRIES.— 

5 ‘‘(A) IN GENERAL.—In the case of a tax6 payer who is a participant or contributor to a 

7 health care sharing ministry during a month in 

8 the taxable year, and who is not covered under 

9 qualified health insurance during such month— 

10 ‘‘(i) such taxpayer (and such tax11 payer’s spouse and dependents, if such in12 dividuals are covered by such health care 

13 sharing ministry) shall be considered to be 

14 eligible individuals for purposes of sub15 section (c)(1) for such month, 

16 ‘‘(ii) the amount of such taxpayer’s 

17 contribution to such health care sharing 

18 ministry in such month shall be considered 

19 to be qualified health insurance costs in 

20 such month, 

21 ‘‘(iii) subsection (c)(3) shall apply to 

22 such taxpayer (and such taxpayer’s spouse 

23 and dependents, if such individuals are 

24 covered by such ministry) without regard 

25 to the policy number requirement, and 


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1 ‘‘(iv) the Secretary may require such 

2 information under paragraph (5) of this 

3 subsection as may be necessary to verify 

4 such taxpayer’s contribution to such min5 istry. 

6 ‘‘(B) HEALTH CARE SHARING MINISTRY.— 

7 For purposes of this paragraph, the term 

8 ‘health care sharing ministry’ means any health 

9 care cost sharing arrangement among persons 

10 of similar beliefs that is not in the trade or 

11 business of providing health insurance. 

12 ‘‘(C) CREDIT DENIED IN THE CASE OF

13 CHARITABLE CONTRIBUTIONS.—This paragraph 

14 shall not apply in the case of any contribution 

15 for which a deduction is allowable under section 

16 170. 

17 ‘‘(h) ELECTION TO FORGO OTHER FEDERAL

18 HEALTH BENEFIT PROGRAMS.— 

19 ‘‘(1) IN GENERAL.—An individual who is a par20 ticipant in, or is entitled to benefits under, any pro21 gram described in subsection (c)(2) in any month 

22 may elect to forgo such individual’s participation in 

23 or entitlement to benefits under such program in 

24 such month. If such election is made with respect to 

25 any month, such month shall not fail to be deemed 


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1 a coverage month with respect to such individual 

2 solely because such individual would, but for such 

3 election, be a participant in or be entitled to benefits 

4 under a program described in subsection (c)(2). 

5 ‘‘(2) MANNER AND REPORTING OF ELEC6 TION.—The election described in paragraph (1) shall 

7 be made in a form and manner specified by the Sec8 retary of Health and Human Services, in consulta9 tion with the Secretary of the Treasury, and a dec10 laration of such election shall be attached to the tax11 payer’s return of tax for the taxable year, in a man12 ner specified by the Secretary of the Treasury. 

13 ‘‘(3) PROSPECTIVE AND YEAR-LONG ELEC14 TION.—Each election described in paragraph (1)— 

15 ‘‘(A) shall not be made with respect to any 

16 month beginning before the date of such elec17 tion, and 

18 ‘‘(B) shall be effective for such period (not 

19 less than 1 calendar year) as shall be specified 

20 by the Secretary of Health and Human Serv21 ices, in consultation with the Secretary of the 

22 Treasury. 

23 ‘‘(i) CREDIT IN EXCESS OF ALLOWABLE CREDIT DE24 POSITED IN TAX-FAVORED HEALTH CARE ACCOUNTS.— 

25 ‘‘(1) IN GENERAL.—The excess, if any, of— 


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1 ‘‘(A) the monthly limitation applicable to 

2 the individual under subsection (b), multiplied 

3 by the number of coverage months of the indi4 vidual for the taxable year, over 

5 ‘‘(B) the credit allowed in such taxable 

6 year with respect to such individual under sub7 section (a), 

8 shall be paid by the Secretary into the designated 

9 account of the individual. 

10 ‘‘(2) DESIGNATED ACCOUNTS.— 

11 ‘‘(A) DESIGNATED ACCOUNT.—For pur12 poses of this subsection, the term ‘designated 

13 account’ means any health savings account 

14 under section 223 or any Archer MSA under 

15 section 220 established and maintained by the 

16 provider of the individual’s qualified health in17 surance— 

18 ‘‘(i) which is designated by the indi19 vidual (in such form and manner as the 

20 Secretary may provide) on the return of 

21 tax for the taxable year, and 

22 ‘‘(ii) which, under the terms of the ac23 count, accepts the payment described in 

24 paragraph (1) on behalf of the individual. 


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1 ‘‘(B) TREATMENT OF PAYMENT.—Any 

2 payment under this subsection to a designated 

3 account— 

4 ‘‘(i) shall not be taken into account 

5 with respect to any dollar limitation which 

6 applies with respect to contributions to 

7 such account (or to tax benefits with re8 spect to such contributions), 

9 ‘‘(ii) shall be included in gross income 

10 of the taxpayer for the taxable year in 

11 which the payment is made (except as pro12 vided in clause (iii)), and 

13 ‘‘(iii) shall be taken into account in 

14 determining any deduction or exclusion 

15 from gross income in the same manner as 

16 if such contribution were made by the tax17 payer. 

18 ‘‘(j) COORDINATION WITH ADVANCE PAYMENTS.— 

19 ‘‘(1) REDUCTION IN CREDIT FOR ADVANCE PAY20 MENTS.—With respect to any taxable year, the 

21 amount which would (but for this subsection, and 

22 without regard to subsection (i)) be allowed as a 

23 credit to the taxpayer under subsection (a) shall be 

24 reduced (but not below zero) by the aggregate 

25 amount paid on behalf of such taxpayer under secVerDate Nov 24 2008 04:18 Jun 24, 2009 Jkt 079200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\S1324.IS S1324

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1 tion 7527A for months beginning in such taxable 

2 year. 

3 ‘‘(2) RECAPTURE OF EXCESS ADVANCE PAY4 MENTS.—If the aggregate amount paid on behalf of 

5 the taxpayer under section 7527A for months begin6 ning in the taxable year exceeds the sum of the 

7 monthly limitations under subsection (b) for such 

8 taxable year, then the tax imposed by this chapter 

9 for such taxable year shall be increased by the sum 

10 of— 

11 ‘‘(A) such excess, plus 

12 ‘‘(B) interest on such excess determined at 

13 the underpayment rate established under sec14 tion 6621 for the period from the date of the 

15 payment under section 7527A to the date such 

16 excess is paid. 

17 For purposes of subparagraph (B), an equal part of 

18 the aggregate amount of the excess shall be deemed 

19 to be attributable to payments made under section 

20 7527A on the first day of each month beginning in 

21 such taxable year, unless the taxpayer establishes 

22 the date on which each such payment giving rise to 

23 such excess occurred, in which case subparagraph 

24 (B) shall be applied with respect to each date so es25 tablished. 


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1 ‘‘(k) REGULATIONS.—The Secretary shall prescribe 

2 regulations for the administration of this section to ensure 

3 that no portion of the amounts taken into account as 

4 qualified health insurance costs are amounts for which an5 other credit, deduction, or exclusion is allowed under this 

6 subtitle, including through a health flexible spending ar7 rangement.’’. 

8 (b) ADVANCE PAYMENT OF CREDIT.—Chapter 77 of 

9 the Internal Revenue Code of 1986 is amended by insert10 ing after section 7527 the following new section: 

11 ‘‘SEC. 7527A. ADVANCE PAYMENT OF QUALIFIED HEALTH 

12 INSURANCE CREDIT. 

13 ‘‘(a) IN GENERAL.—The Secretary shall establish a 

14 program for making payments on behalf of taxpayers who 

15 are eligible individuals within the meaning of section 

16 36B(c) to providers of qualified health insurance (as de17 fined in section 36B(e)) or to health care sharing min18 istries (as defined in section 36B(g)(7)(B)) for such indi19 viduals. 

20 ‘‘(b) LIMITATION.—The Secretary may make pay21 ments under subsection (a) only to the extent that the Sec22 retary determines that the amount of such payments made 

23 on behalf of any taxpayer for any month does not exceed 

24 the monthly limitation in effect under section 36B(b) for 

25 the taxpayer for such month.’’. 


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1 (c) INFORMATION REPORTING.— 

2 (1) IN GENERAL.—Subpart B of part III of 

3 subchapter A of chapter 61 of the Internal Revenue 

4 Code of 1986 is amended by inserting after section 

5 6050W the following new section: 

6 ‘‘SEC. 6050X. RETURNS RELATING TO QUALIFIED HEALTH 

7 INSURANCE CREDIT. 

8 ‘‘(a) REQUIREMENT OF REPORTING.—Every person 

9 who is entitled to receive payments for any month of any 

10 calendar year under section 7527A (relating to advance 

11 payment of qualified health insurance credit) with respect 

12 to any individual shall, at such time as the Secretary may 

13 prescribe, make the return described in subsection (b) with 

14 respect to each such individual. 

15 ‘‘(b) FORM AND MANNER OF RETURNS.—A return 

16 is described in this subsection if such return— 

17 ‘‘(1) is in such form as the Secretary may pre18 scribe, and 

19 ‘‘(2) contains, with respect to each individual 

20 referred to in subsection (a)— 

21 ‘‘(A) the name, address, and TIN of each 

22 such individual, 

23 ‘‘(B) the months for which amounts pay24 ments under section 7527A were received, 

25 ‘‘(C) the amount of each such payment, 


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1 ‘‘(D) the type of insurance coverage pro2 vided by such person with respect to such indi3 vidual and the policy number associated with 

4 such coverage, if applicable, 

5 ‘‘(E) the name, address, and TIN of the 

6 spouse and each dependent covered under such 

7 coverage, and 

8 ‘‘(F) such other information as the Sec9 retary may prescribe. 

10 ‘‘(c) STATEMENTS TO BE FURNISHED TO INDIVID11 UALS WITH RESPECT TO WHOM INFORMATION IS RE12 QUIRED.—Every person required to make a return under 

13 subsection (a) shall furnish to each individual whose name 

14 is required to be set forth in such return a written state15 ment showing— 

16 ‘‘(1) the name and address of the person re17 quired to make such return and the phone number 

18 of the information contact for such person, and 

19 ‘‘(2) the information required to be shown on 

20 the return with respect to such individual. 

21 The written statement required under the preceding sen22 tence shall be furnished on or before January 31 of the 

23 year following the calendar year for which the return 

24 under subsection (a) is required to be made. 


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1 ‘‘(d) RETURNS WHICH WOULD BE REQUIRED TO BE

2 MADE BY 2 OR MORE PERSONS.—Except to the extent 

3 provided in regulations prescribed by the Secretary, in the 

4 case of any amount received by any person on behalf of 

5 another person, only the person first receiving such 

6 amount shall be required to make the return under sub7 section (a).’’. 

8 (2) ASSESSABLE PENALTIES.— 

9 (A) Subparagraph (B) of section 

10 6724(d)(1) of such Code is amended by striking 

11 ‘‘or’’ at the end of clause (xxii), by striking 

12 ‘‘and’’ at the end of clause (xxiii) and inserting 

13 ‘‘or’’, and by inserting after clause (xxiii) the 

14 following new clause: 

15 ‘‘(xxiv) section 6050X (relating to re16 turns relating to qualified health insurance 

17 credit), and’’. 

18 (B) Paragraph (2) of section 6724(d) of 

19 such Code is amended by striking ‘‘or’’ at the 

20 end of subparagraph (EE), by striking the pe21 riod at the end of subparagraph (FF) and in22 serting ‘‘, or’’, and by inserting after subpara23 graph (FF) the following new subparagraph: 

24 ‘‘(GG) section 6050X (relating to returns 

25 relating to qualified health insurance credit).’’. 


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1 (d) CONFORMING AMENDMENTS.— 

2 (1) Paragraph (2) of section 1324(b) of title 

3 31, United States Code, is amended by inserting 

4 ‘‘36B,’’ after ‘‘36A,’’. 

5 (2) The table of sections for subpart C of part 

6 IV of subchapter A of chapter 1 of the Internal Rev7 enue Code of 1986 is amended by inserting after the 

8 item relating to section 36A the following new item: 

‘‘Sec. 36B. Qualified health insurance credit.’’. 

9 (3) The table of sections for chapter 77 of such 

10 Code is amended by inserting after the item relating 

11 to section 7527 the following new item: 

‘‘Sec. 7527A. Advance payment of qualified health insurance credit.’’. 

12 (4) The table of sections for subpart B of part 

13 III of subchapter A of chapter 61 of such Code is 

14 amended by adding at the end the following new 

15 item: 

‘‘Sec. 6050X. Returns relating to qualified health insurance credit.’’. 

16 (e) EFFECTIVE DATE.—The amendments made by 

17 this section shall apply to taxable years beginning after 

18 December 31, 2009. 


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1 Subtitle B—Improvements to 

2 Health Savings Accounts 

3 SEC. 111. PURCHASE OF HEALTH INSURANCE FROM HSA 

4 AND ARCHER MSA ACCOUNTS. 

5 (a) HEALTH SAVINGS ACCOUNTS.—Paragraph (2) of 

6 section 223(d) of the Internal Revenue Code of 1986 is 

7 amended to read as follows: 

8 ‘‘(2) QUALIFIED MEDICAL EXPENSES.— 

9 ‘‘(A) IN GENERAL.—The term ‘qualified 

10 medical expenses’ means, with respect to an ac11 count beneficiary, amounts paid by such bene12 ficiary for medical care (as defined in section 

13 213(d)) for any individual covered by a high de14 ductible health plan of the account beneficiary, 

15 but only to the extent such amounts are not 

16 compensated for by insurance or otherwise. 

17 ‘‘(B) HEALTH INSURANCE MAY NOT BE

18 PURCHASED FROM ACCOUNT.—Except as pro19 vided in subparagraph (C), subparagraph (A) 

20 shall not apply to any payment for insurance. 

21 ‘‘(C) EXCEPTIONS.—Subparagraph (B) 

22 shall not apply to any expense for coverage 

23 under— 


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1 ‘‘(i) a health plan during any period 

2 of continuation coverage required under 

3 any Federal law, 

4 ‘‘(ii) a qualified long-term care insur5 ance contract (as defined in section 

6 7702B(b)), 

7 ‘‘(iii) a health plan during any period 

8 in which the individual is receiving unem9 ployment compensation under any Federal 

10 or State law, 

11 ‘‘(iv) a high deductible health plan, or 

12 ‘‘(v) any health insurance under title 

13 XVIII of the Social Security Act, other 

14 than a Medicare supplemental policy (as 

15 defined in section 1882 of such Act).’’. 

16 (b) ARCHER MSAS.—Subparagraph (B) of section 

17 220(d)(2) of the Internal Revenue Code of 1986 is amend18 ed to read as follows: 

19 ‘‘(B) HEALTH INSURANCE MAY NOT BE

20 PURCHASED FROM ACCOUNT.— 

21 ‘‘(i) IN GENERAL.—Subparagraph (A) 

22 shall not apply to any payment for insur23 ance. 


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1 ‘‘(ii) EXCEPTIONS.—Clause (i) shall 

2 not apply to any expense for coverage 

3 under— 

4 ‘‘(I) a health plan during any pe5 riod of continuation coverage required 

6 under any Federal law, 

7 ‘‘(II) a qualified long-term care 

8 insurance contract (as defined in sec9 tion 7702B(b)), 

10 ‘‘(III) a health plan during any 

11 period in which the individual is re12 ceiving unemployment compensation 

13 under any Federal or State law, 

14 ‘‘(IV) a high deductible health 

15 plan, or 

16 ‘‘(V) any health insurance under 

17 title XVIII of the Social Security Act, 

18 other than a Medicare supplemental 

19 policy (as defined in section 1882 of 

20 such Act).’’. 

21 (c) EFFECTIVE DATE.—The amendments made by 

22 this section shall apply with respect to insurance pur23 chased after the date of the enactment of this Act in tax24 able years beginning after such date. 


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1 Subtitle C—Medical Care Access 

2 Protection 

3 SEC. 121. SHORT TITLE. 

4 This subtitle may be cited as the ‘‘Medical Care Ac5 cess Protection Act of 2009’’ or the ‘‘MCAP Act’’. 

6 SEC. 122. FINDINGS AND PURPOSE. 

7 (a) FINDINGS.— 

8 (1) EFFECT ON HEALTH CARE ACCESS AND

9 COSTS.—Congress finds that our current civil justice 

10 system is adversely affecting patient access to health 

11 care services, better patient care, and cost-efficient 

12 health care, in that the health care liability system 

13 is a costly and ineffective mechanism for resolving 

14 claims of health care liability and compensating in15 jured patients, and is a deterrent to the sharing of 

16 information among health care professionals which 

17 impedes efforts to improve patient safety and quality 

18 of care. 

19 (2) EFFECT ON INTERSTATE COMMERCE.— 

20 Congress finds that the health care and insurance 

21 industries are industries affecting interstate com22 merce and the health care liability litigation systems 

23 existing throughout the United States are activities 

24 that affect interstate commerce by contributing to 

25 the high costs of health care and premiums for 


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1 health care liability insurance purchased by health 

2 care system providers. 

3 (3) EFFECT ON FEDERAL SPENDING.—Con4 gress finds that the health care liability litigation 

5 systems existing throughout the United States have 

6 a significant effect on the amount, distribution, and 

7 use of Federal funds because of— 

8 (A) the large number of individuals who 

9 receive health care benefits under programs op10 erated or financed by the Federal Government; 

11 (B) the large number of individuals who 

12 benefit because of the exclusion from Federal 

13 taxes of the amounts spent to provide them 

14 with health insurance benefits; and 

15 (C) the large number of health care pro16 viders who provide items or services for which 

17 the Federal Government makes payments. 

18 (b) PURPOSE.—It is the purpose of this subtitle to 

19 implement reasonable, comprehensive, and effective health 

20 care liability reforms designed to— 

21 (1) improve the availability of health care serv22 ices in cases in which health care liability actions 

23 have been shown to be a factor in the decreased 

24 availability of services; 


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1 (2) reduce the incidence of ‘‘defensive medi2 cine’’ and lower the cost of health care liability in3 surance, all of which contribute to the escalation of 

4 health care costs; 

5 (3) ensure that persons with meritorious health 

6 care injury claims receive fair and adequate com7 pensation, including reasonable noneconomic dam8 ages; 

9 (4) improve the fairness and cost-effectiveness 

10 of our current health care liability system to resolve 

11 disputes over, and provide compensation for, health 

12 care liability by reducing uncertainty in the amount 

13 of compensation provided to injured individuals; and 

14 (5) provide an increased sharing of information 

15 in the health care system which will reduce unin16 tended injury and improve patient care. 

17 SEC. 123. DEFINITIONS. 

18 In this subtitle: 

19 (1) ALTERNATIVE DISPUTE RESOLUTION SYS20 TEM; ADR.—The term ‘‘alternative dispute resolution 

21 system’’ or ‘‘ADR’’ means a system that provides 

22 for the resolution of health care lawsuits in a man23 ner other than through a civil action brought in a 

24 State or Federal court. 


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1 (2) CLAIMANT.—The term ‘‘claimant’’ means 

2 any person who brings a health care lawsuit, includ3 ing a person who asserts or claims a right to legal 

4 or equitable contribution, indemnity or subrogation, 

5 arising out of a health care liability claim or action, 

6 and any person on whose behalf such a claim is as7 serted or such an action is brought, whether de8 ceased, incompetent, or a minor. 

9 (3) COLLATERAL SOURCE BENEFITS.—The 

10 term ‘‘collateral source benefits’’ means any amount 

11 paid or reasonably likely to be paid in the future to 

12 or on behalf of the claimant, or any service, product 

13 or other benefit provided or reasonably likely to be 

14 provided in the future to or on behalf of the claim15 ant, as a result of the injury or wrongful death, pur16 suant to— 

17 (A) any State or Federal health, sickness, 

18 income-disability, accident, or workers’ com19 pensation law; 

20 (B) any health, sickness, income-disability, 

21 or accident insurance that provides health bene22 fits or income-disability coverage; 

23 (C) any contract or agreement of any 

24 group, organization, partnership, or corporation 

25 to provide, pay for, or reimburse the cost of 


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1 medical, hospital, dental, or income disability 

2 benefits; and 

3 (D) any other publicly or privately funded 

4 program. 

5 (4) COMPENSATORY DAMAGES.—The term 

6 ‘‘compensatory damages’’ means objectively 

7 verifiable monetary losses incurred as a result of the 

8 provision of, use of, or payment for (or failure to 

9 provide, use, or pay for) health care services or med10 ical products, such as past and future medical ex11 penses, loss of past and future earnings, cost of ob12 taining domestic services, loss of employment, and 

13 loss of business or employment opportunities, dam14 ages for physical and emotional pain, suffering, in15 convenience, physical impairment, mental anguish, 

16 disfigurement, loss of enjoyment of life, loss of soci17 ety and companionship, loss of consortium (other 

18 than loss of domestic service), hedonic damages, in19 jury to reputation, and all other nonpecuniary losses 

20 of any kind or nature. Such term includes economic 

21 damages and noneconomic damages, as such terms 

22 are defined in this section. 

23 (5) CONTINGENT FEE.—The term ‘‘contingent 

24 fee’’ includes all compensation to any person or perVerDate Nov 24 2008 04:18 Jun 24, 2009 Jkt 079200 PO 00000 Frm 00026 Fmt 6652 Sfmt 6201 E:\BILLS\S1324.IS S1324

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1 sons which is payable only if a recovery is effected 

2 on behalf of one or more claimants. 

3 (6) ECONOMIC DAMAGES.—The term ‘‘economic 

4 damages’’ means objectively verifiable monetary 

5 losses incurred as a result of the provision of, use 

6 of, or payment for (or failure to provide, use, or pay 

7 for) health care services or medical products, such as 

8 past and future medical expenses, loss of past and 

9 future earnings, cost of obtaining domestic services, 

10 loss of employment, and loss of business or employ11 ment opportunities. 

12 (7) HEALTH CARE GOODS OR SERVICES.—The 

13 term ‘‘health care goods or services’’ means any 

14 goods or services provided by a health care institu15 tion, provider, or by any individual working under 

16 the supervision of a health care provider, that relates 

17 to the diagnosis, prevention, care, or treatment of 

18 any human disease or impairment, or the assessment 

19 of the health of human beings. 

20 (8) HEALTH CARE INSTITUTION.—The term 

21 ‘‘health care institution’’ means any entity licensed 

22 under Federal or State law to provide health care 

23 services (including but not limited to ambulatory 

24 surgical centers, assisted living facilities, emergency 

25 medical services providers, hospices, hospitals and 


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1 hospital systems, nursing homes, or other entities li2 censed to provide such services). 

3 (9) HEALTH CARE LAWSUIT.—The term 

4 ‘‘health care lawsuit’’ means any health care liability 

5 claim concerning the provision of health care goods 

6 or services affecting interstate commerce, or any 

7 health care liability action concerning the provision 

8 of (or the failure to provide) health care goods or 

9 services affecting interstate commerce, brought in a 

10 State or Federal court or pursuant to an alternative 

11 dispute resolution system, against a health care pro12 vider or a health care institution regardless of the 

13 theory of liability on which the claim is based, or the 

14 number of claimants, plaintiffs, defendants, or other 

15 parties, or the number of claims or causes of action, 

16 in which the claimant alleges a health care liability 

17 claim. 

18 (10) HEALTH CARE LIABILITY ACTION.—The 

19 term ‘‘health care liability action’’ means a civil ac20 tion brought in a State or Federal Court or pursu21 ant to an alternative dispute resolution system, 

22 against a health care provider or a health care insti23 tution regardless of the theory of liability on which 

24 the claim is based, or the number of plaintiffs, de25 fendants, or other parties, or the number of causes 


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1 of action, in which the claimant alleges a health care 

2 liability claim. 

3 (11) HEALTH CARE LIABILITY CLAIM.—The 

4 term ‘‘health care liability claim’’ means a demand 

5 by any person, whether or not pursuant to ADR, 

6 against a health care provider or health care institu7 tion, including third-party claims, cross-claims, 

8 counter-claims, or contribution claims, which are 

9 based upon the provision of, use of, or payment for 

10 (or the failure to provide, use, or pay for) health 

11 care services, regardless of the theory of liability on 

12 which the claim is based, or the number of plaintiffs, 

13 defendants, or other parties, or the number of 

14 causes of action. 

15 (12) HEALTH CARE PROVIDER.— 

16 (A) IN GENERAL.—The term ‘‘health care 

17 provider’’ means any person (including but not 

18 limited to a physician (as defined by section 

19 1861(r) of the Social Security Act (42 U.S.C. 

20 1395x(r)), registered nurse, dentist, podiatrist, 

21 pharmacist, chiropractor, or optometrist) re22 quired by State or Federal law to be licensed, 

23 registered, or certified to provide health care 

24 services, and being either so licensed, regVerDate Nov 24 2008 04:18 Jun 24, 2009 Jkt 079200 PO 00000 Frm 00029 Fmt 6652 Sfmt 6201 E:\BILLS\S1324.IS S1324

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1 istered, or certified, or exempted from such re2 quirement by other statute or regulation. 

3 (B) TREATMENT OF CERTAIN PROFES4 SIONAL ASSOCIATIONS.—For purposes of this 

5 subtitle, a professional association that is orga6 nized under State law by an individual physi7 cian or group of physicians, a partnership or 

8 limited liability partnership formed by a group 

9 of physicians, a nonprofit health corporation 

10 certified under State law, or a company formed 

11 by a group of physicians under State law shall 

12 be treated as a health care provider under sub13 paragraph (A). 

14 (13) MALICIOUS INTENT TO INJURE.—The 

15 term ‘‘malicious intent to injure’’ means inten16 tionally causing or attempting to cause physical in17 jury other than providing health care goods or serv18 ices. 

19 (14) NONECONOMIC DAMAGES.—The term 

20 ‘‘noneconomic damages’’ means damages for phys21 ical and emotional pain, suffering, inconvenience, 

22 physical impairment, mental anguish, disfigurement, 

23 loss of enjoyment of life, loss of society and compan24 ionship, loss of consortium (other than loss of do25 mestic service), hedonic damages, injury to reputaVerDate Nov 24 2008 04:18 Jun 24, 2009 Jkt 079200 PO 00000 Frm 00030 Fmt 6652 Sfmt 6201 E:\BILLS\S1324.IS S1324

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1 tion, and all other nonpecuniary losses of any kind 

2 or nature. 

3 (15) PUNITIVE DAMAGES.—The term ‘‘punitive 

4 damages’’ means damages awarded, for the purpose 

5 of punishment or deterrence, and not solely for com6 pensatory purposes, against a health care provider 

7 or health care institution. Punitive damages are nei8 ther economic nor noneconomic damages. 

9 (16) RECOVERY.—The term ‘‘recovery’’ means 

10 the net sum recovered after deducting any disburse11 ments or costs incurred in connection with prosecu12 tion or settlement of the claim, including all costs 

13 paid or advanced by any person. Costs of health care 

14 incurred by the plaintiff and the attorneys’ office 

15 overhead costs or charges for legal services are not 

16 deductible disbursements or costs for such purpose. 

17 (17) STATE.—The term ‘‘State’’ means each of 

18 the several States, the District of Columbia, the 

19 Commonwealth of Puerto Rico, the Virgin Islands, 

20 Guam, American Samoa, the Northern Mariana Is21 lands, the Trust Territory of the Pacific Islands, and 

22 any other territory or possession of the United 

23 States, or any political subdivision thereof. 


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1 SEC. 124. ENCOURAGING SPEEDY RESOLUTION OF CLAIMS. 

2 (a) IN GENERAL.—Except as otherwise provided for 

3 in this section, the time for the commencement of a health 

4 care lawsuit shall be 3 years after the date of manifesta5 tion of injury or 1 year after the claimant discovers, or 

6 through the use of reasonable diligence should have discov7 ered, the injury, whichever occurs first. 

8 (b) GENERAL EXCEPTION.—The time for the com9 mencement of a health care lawsuit shall not exceed 3 

10 years after the date of manifestation of injury unless the 

11 tolling of time was delayed as a result of— 

12 (1) fraud; 

13 (2) intentional concealment; or 

14 (3) the presence of a foreign body, which has no 

15 therapeutic or diagnostic purpose or effect, in the 

16 person of the injured person. 

17 (c) MINORS.—An action by a minor shall be com18 menced within 3 years from the date of the alleged mani19 festation of injury except that if such minor is under the 

20 full age of 6 years, such action shall be commenced within 

21 3 years of the manifestation of injury, or prior to the 

22 eighth birthday of the minor, whichever provides a longer 

23 period. Such time limitation shall be tolled for minors for 

24 any period during which a parent or guardian and a health 

25 care provider or health care institution have committed 


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1 fraud or collusion in the failure to bring an action on be2 half of the injured minor. 

3 (d) RULE 11 SANCTIONS.—Whenever a Federal or 

4 State court determines (whether by motion of the parties 

5 or whether on the motion of the court) that there has been 

6 a violation of rule 11 of the Federal Rules of Civil Proce7 dure (or a similar violation of applicable State court rules) 

8 in a health care liability action to which this subtitle ap9 plies, the court shall impose upon the attorneys, law firms, 

10 or pro se litigants that have violated rule 11 or are respon11 sible for the violation, an appropriate sanction, which shall 

12 include an order to pay the other party or parties for the 

13 reasonable expenses incurred as a direct result of the filing 

14 of the pleading, motion, or other paper that is the subject 

15 of the violation, including a reasonable attorneys’ fee. 

16 Such sanction shall be sufficient to deter repetition of such 

17 conduct or comparable conduct by others similarly situ18 ated, and to compensate the party or parties injured by 

19 such conduct. 

20 SEC. 125. COMPENSATING PATIENT INJURY. 

21 (a) UNLIMITED AMOUNT OF DAMAGES FOR ACTUAL

22 ECONOMIC LOSSES IN HEALTH CARE LAWSUITS.—In any 

23 health care lawsuit, nothing in this subtitle shall limit the 

24 recovery by a claimant of the full amount of the available 


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1 economic damages, notwithstanding the limitation con2 tained in subsection (b). 

3 (b) ADDITIONAL NONECONOMIC DAMAGES.— 

4 (1) HEALTH CARE PROVIDERS.—In any health 

5 care lawsuit where final judgment is rendered 

6 against a health care provider, the amount of non7 economic damages recovered from the provider, if 

8 otherwise available under applicable Federal or State 

9 law, may be as much as $250,000, regardless of the 

10 number of parties other than a health care institu11 tion against whom the action is brought or the num12 ber of separate claims or actions brought with re13 spect to the same occurrence. 

14 (2) HEALTH CARE INSTITUTIONS.— 

15 (A) SINGLE INSTITUTION.—In any health 

16 care lawsuit where final judgment is rendered 

17 against a single health care institution, the 

18 amount of noneconomic damages recovered 

19 from the institution, if otherwise available 

20 under applicable Federal or State law, may be 

21 as much as $250,000, regardless of the number 

22 of parties against whom the action is brought 

23 or the number of separate claims or actions 

24 brought with respect to the same occurrence. 


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1 (B) MULTIPLE INSTITUTIONS.—In any 

2 health care lawsuit where final judgment is ren3 dered against more than one health care insti4 tution, the amount of noneconomic damages re5 covered from each institution, if otherwise avail6 able under applicable Federal or State law, may 

7 be as much as $250,000, regardless of the 

8 number of parties against whom the action is 

9 brought or the number of separate claims or ac10 tions brought with respect to the same occur11 rence, except that the total amount recovered 

12 from all such institutions in such lawsuit shall 

13 not exceed $500,000. 

14 (c) NO DISCOUNT OF AWARD FOR NONECONOMIC

15 DAMAGES.—In any health care lawsuit— 

16 (1) an award for future noneconomic damages 

17 shall not be discounted to present value; 

18 (2) the jury shall not be informed about the 

19 maximum award for noneconomic damages under 

20 subsection (b); 

21 (3) an award for noneconomic damages in ex22 cess of the limitations provided for in subsection (b) 

23 shall be reduced either before the entry of judgment, 

24 or by amendment of the judgment after entry of 

25 judgment, and such reduction shall be made before 


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1 accounting for any other reduction in damages re2 quired by law; and 

3 (4) if separate awards are rendered for past 

4 and future noneconomic damages and the combined 

5 awards exceed the limitations described in subsection 

6 (b), the future noneconomic damages shall be re7 duced first. 

8 (d) FAIR SHARE RULE.—In any health care lawsuit, 

9 each party shall be liable for that party’s several share 

10 of any damages only and not for the share of any other 

11 person. Each party shall be liable only for the amount of 

12 damages allocated to such party in direct proportion to 

13 such party’s percentage of responsibility. A separate judg14 ment shall be rendered against each such party for the 

15 amount allocated to such party. For purposes of this sec16 tion, the trier of fact shall determine the proportion of 

17 responsibility of each party for the claimant’s harm. 

18 SEC. 126. MAXIMIZING PATIENT RECOVERY. 

19 (a) COURT SUPERVISION OF SHARE OF DAMAGES

20 ACTUALLY PAID TO CLAIMANTS.— 

21 (1) IN GENERAL.—In any health care lawsuit, 

22 the court shall supervise the arrangements for pay23 ment of damages to protect against conflicts of in24 terest that may have the effect of reducing the 


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1 amount of damages awarded that are actually paid 

2 to claimants. 

3 (2) CONTINGENCY FEES.— 

4 (A) IN GENERAL.—In any health care law5 suit in which the attorney for a party claims a 

6 financial stake in the outcome by virtue of a 

7 contingent fee, the court shall have the power 

8 to restrict the payment of a claimant’s damage 

9 recovery to such attorney, and to redirect such 

10 damages to the claimant based upon the inter11 ests of justice and principles of equity. 

12 (B) LIMITATION.—The total of all contin13 gent fees for representing all claimants in a 

14 health care lawsuit shall not exceed the fol15 lowing limits: 

16 (i) 40 percent of the first $50,000 re17 covered by the claimant(s). 

(ii) 331 18 ⁄3 percent of the next $50,000 

19 recovered by the claimant(s). 

20 (iii) 25 percent of the next $500,000 

21 recovered by the claimant(s). 

22 (iv) 15 percent of any amount by 

23 which the recovery by the claimant(s) is in 

24 excess of $600,000. 

25 (b) APPLICABILITY.— 


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1 (1) IN GENERAL.—The limitations in subsection 

2 (a) shall apply whether the recovery is by judgment, 

3 settlement, mediation, arbitration, or any other form 

4 of alternative dispute resolution. 

5 (2) MINORS.—In a health care lawsuit involving 

6 a minor or incompetent person, a court retains the 

7 authority to authorize or approve a fee that is less 

8 than the maximum permitted under this section. 

9 (c) EXPERT WITNESSES.— 

10 (1) REQUIREMENT.—No individual shall be 

11 qualified to testify as an expert witness concerning 

12 issues of negligence in any health care lawsuit 

13 against a defendant unless such individual— 

14 (A) except as required under paragraph 

15 (2), is a health care professional who— 

16 (i) is appropriately credentialed or li17 censed in 1 or more States to deliver 

18 health care services; and 

19 (ii) typically treats the diagnosis or 

20 condition or provides the type of treatment 

21 under review; and 

22 (B) can demonstrate by competent evi23 dence that, as a result of training, education, 

24 knowledge, and experience in the evaluation, di25 agnosis, and treatment of the disease or injury 


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1 which is the subject matter of the lawsuit 

2 against the defendant, the individual was sub3 stantially familiar with applicable standards of 

4 care and practice as they relate to the act or 

5 omission which is the subject of the lawsuit on 

6 the date of the incident. 

7 (2) PHYSICIAN REVIEW.—In a health care law8 suit, if the claim of the plaintiff involved treatment 

9 that is recommended or provided by a physician 

10 (allopathic or osteopathic), an individual shall not be 

11 qualified to be an expert witness under this sub12 section with respect to issues of negligence con13 cerning such treatment unless such individual is a 

14 physician. 

15 (3) SPECIALTIES AND SUBSPECIALTIES.—With 

16 respect to a lawsuit described in paragraph (1), a 

17 court shall not permit an expert in one medical spe18 cialty or subspecialty to testify against a defendant 

19 in another medical specialty or subspecialty unless, 

20 in addition to a showing of substantial familiarity in 

21 accordance with paragraph (1)(B), there is a show22 ing that the standards of care and practice in the 

23 two specialty or subspecialty fields are similar. 

24 (4) LIMITATION.—The limitations in this sub25 section shall not apply to expert witnesses testifying 


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1 as to the degree or permanency of medical or phys2 ical impairment. 

3 SEC. 127. ADDITIONAL HEALTH BENEFITS. 

4 (a) IN GENERAL.—The amount of any damages re5 ceived by a claimant in any health care lawsuit shall be 

6 reduced by the court by the amount of any collateral 

7 source benefits to which the claimant is entitled, less any 

8 insurance premiums or other payments made by the claim9 ant (or by the spouse, parent, child, or legal guardian of 

10 the claimant) to obtain or secure such benefits. 

11 (b) PRESERVATION OF CURRENT LAW.—Where a 

12 payor of collateral source benefits has a right of recovery 

13 by reimbursement or subrogation and such right is per14 mitted under Federal or State law, subsection (a) shall 

15 not apply. 

16 (c) APPLICATION OF PROVISION.—This section shall 

17 apply to any health care lawsuit that is settled or resolved 

18 by a fact finder. 

19 SEC. 128. PUNITIVE DAMAGES. 

20 (a) PUNITIVE DAMAGES PERMITTED.— 

21 (1) IN GENERAL.—Punitive damages may, if 

22 otherwise available under applicable State or Federal 

23 law, be awarded against any person in a health care 

24 lawsuit only if it is proven by clear and convincing 

25 evidence that such person acted with malicious inVerDate Nov 24 2008 04:18 Jun 24, 2009 Jkt 079200 PO 00000 Frm 00040 Fmt 6652 Sfmt 6201 E:\BILLS\S1324.IS S1324

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1 tent to injure the claimant, or that such person de2 liberately failed to avoid unnecessary injury that 

3 such person knew the claimant was substantially 

4 certain to suffer. 

5 (2) FILING OF LAWSUIT.—No demand for puni6 tive damages shall be included in a health care law7 suit as initially filed. A court may allow a claimant 

8 to file an amended pleading for punitive damages 

9 only upon a motion by the claimant and after a find10 ing by the court, upon review of supporting and op11 posing affidavits or after a hearing, after weighing 

12 the evidence, that the claimant has established by a 

13 substantial probability that the claimant will prevail 

14 on the claim for punitive damages. 

15 (3) SEPARATE PROCEEDING.—At the request of 

16 any party in a health care lawsuit, the trier of fact 

17 shall consider in a separate proceeding— 

18 (A) whether punitive damages are to be 

19 awarded and the amount of such award; and 

20 (B) the amount of punitive damages fol21 lowing a determination of punitive liability. 

22 If a separate proceeding is requested, evidence rel23 evant only to the claim for punitive damages, as de24 termined by applicable State law, shall be inadmisVerDate Nov 24 2008 04:18 Jun 24, 2009 Jkt 079200 PO 00000 Frm 00041 Fmt 6652 Sfmt 6201 E:\BILLS\S1324.IS S1324

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1 sible in any proceeding to determine whether com2 pensatory damages are to be awarded. 

3 (4) LIMITATION WHERE NO COMPENSATORY

4 DAMAGES ARE AWARDED.—In any health care law5 suit where no judgment for compensatory damages 

6 is rendered against a person, no punitive damages 

7 may be awarded with respect to the claim in such 

8 lawsuit against such person. 

9 (b) DETERMINING AMOUNT OF PUNITIVE DAM10 AGES.— 

11 (1) FACTORS CONSIDERED.—In determining 

12 the amount of punitive damages under this section, 

13 the trier of fact shall consider only the following: 

14 (A) the severity of the harm caused by the 

15 conduct of such party; 

16 (B) the duration of the conduct or any 

17 concealment of it by such party; 

18 (C) the profitability of the conduct to such 

19 party; 

20 (D) the number of products sold or med21 ical procedures rendered for compensation, as 

22 the case may be, by such party, of the kind 

23 causing the harm complained of by the claim24 ant; 


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1 (E) any criminal penalties imposed on such 

2 party, as a result of the conduct complained of 

3 by the claimant; and 

4 (F) the amount of any civil fines assessed 

5 against such party as a result of the conduct 

6 complained of by the claimant. 

7 (2) MAXIMUM AWARD.—The amount of punitive 

8 damages awarded in a health care lawsuit may not 

9 exceed an amount equal to two times the amount of 

10 economic damages awarded in the lawsuit or 

11 $250,000, whichever is greater. The jury shall not 

12 be informed of the limitation under the preceding 

13 sentence. 

14 (c) LIABILITY OF HEALTH CARE PROVIDERS.— 

15 (1) IN GENERAL.—A health care provider who 

16 prescribes, or who dispenses pursuant to a prescrip17 tion, a drug, biological product, or medical device 

18 approved by the Food and Drug Administration, for 

19 an approved indication of the drug, biological prod20 uct, or medical device, shall not be named as a party 

21 to a product liability lawsuit invoking such drug, bi22 ological product, or medical device and shall not be 

23 liable to a claimant in a class action lawsuit against 

24 the manufacturer, distributor, or product seller of 

25 such drug, biological product, or medical device. 


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1 (2) MEDICAL PRODUCT.—The term ‘‘medical 

2 product’’ means a drug or device intended for hu3 mans. The terms ‘‘drug’’ and ‘‘device’’ have the 

4 meanings given such terms in sections 201(g)(1) and 

5 201(h) of the Federal Food, Drug and Cosmetic Act 

6 (21 U.S.C. 321), respectively, including any compo7 nent or raw material used therein, but excluding 

8 health care services. 

9 SEC. 129. AUTHORIZATION OF PAYMENT OF FUTURE DAM10 AGES TO CLAIMANTS IN HEALTH CARE LAW11 SUITS. 

12 (a) IN GENERAL.—In any health care lawsuit, if an 

13 award of future damages, without reduction to present 

14 value, equaling or exceeding $50,000 is made against a 

15 party with sufficient insurance or other assets to fund a 

16 periodic payment of such a judgment, the court shall, at 

17 the request of any party, enter a judgment ordering that 

18 the future damages be paid by periodic payments in ac19 cordance with the Uniform Periodic Payment of Judg20 ments Act promulgated by the National Conference of 

21 Commissioners on Uniform State Laws. 

22 (b) APPLICABILITY.—This section applies to all ac23 tions which have not been first set for trial or retrial be24 fore the effective date of this subtitle. 


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1 SEC. 130. EFFECT ON OTHER LAWS. 

2 (a) GENERAL VACCINE INJURY.— 

3 (1) IN GENERAL.—To the extent that title XXI 

4 of the Public Health Service Act establishes a Fed5 eral rule of law applicable to a civil action brought 

6 for a vaccine-related injury or death— 

7 (A) this subtitle shall not affect the appli8 cation of the rule of law to such an action; and 

9 (B) any rule of law prescribed by this sub10 title in conflict with a rule of law of such title 

11 XXI shall not apply to such action. 

12 (2) EXCEPTION.—If there is an aspect of a civil 

13 action brought for a vaccine-related injury or death 

14 to which a Federal rule of law under title XXI of 

15 the Public Health Service Act does not apply, then 

16 this subtitle or otherwise applicable law (as deter17 mined under this subtitle) will apply to such aspect 

18 of such action. 

19 (b) SMALLPOX VACCINE INJURY.— 

20 (1) IN GENERAL.—To the extent that part C of 

21 title II of the Public Health Service Act establishes 

22 a Federal rule of law applicable to a civil action 

23 brought for a smallpox vaccine-related injury or 

24 death— 

25 (A) this subtitle shall not affect the appli26 cation of the rule of law to such an action; and 


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1 (B) any rule of law prescribed by this sub2 title in conflict with a rule of law of such part 

3 C shall not apply to such action. 

4 (2) EXCEPTION.—If there is an aspect of a civil 

5 action brought for a smallpox vaccine-related injury 

6 or death to which a Federal rule of law under part 

7 C of title II of the Public Health Service Act does 

8 not apply, then this subtitle or otherwise applicable 

9 law (as determined under this subtitle) will apply to 

10 such aspect of such action. 

11 (c) OTHER FEDERAL LAW.—Except as provided in 

12 this section, nothing in this subtitle shall be deemed to 

13 affect any defense available, or any limitation on liability 

14 that applies to, a defendant in a health care lawsuit or 

15 action under any other provision of Federal law. 

16 SEC. 131. STATE FLEXIBILITY AND PROTECTION OF 

17 STATES’ RIGHTS. 

18 (a) HEALTH CARE LAWSUITS.—The provisions gov19 erning health care lawsuits set forth in this subtitle shall 

20 preempt, subject to subsections (b) and (c), State law to 

21 the extent that State law prevents the application of any 

22 provisions of law established by or under this subtitle. The 

23 provisions governing health care lawsuits set forth in this 

24 subtitle supersede chapter 171 of title 28, United States 

25 Code, to the extent that such chapter— 


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1 (1) provides for a greater amount of damages 

2 or contingent fees, a longer period in which a health 

3 care lawsuit may be commenced, or a reduced appli4 cability or scope of periodic payment of future dam5 ages, than provided in this subtitle; or 

6 (2) prohibits the introduction of evidence re7 garding collateral source benefits. 

8 (b) PREEMPTION OF CERTAIN STATE LAWS.—No 

9 provision of this subtitle shall be construed to preempt any 

10 State law (whether effective before, on, or after the date 

11 of the enactment of this subtitle) that specifies a par12 ticular monetary amount of compensatory or punitive 

13 damages (or the total amount of damages) that may be 

14 awarded in a health care lawsuit, regardless of whether 

15 such monetary amount is greater or lesser than is provided 

16 for under this subtitle, notwithstanding section 125(a). 

17 (c) PROTECTION OF STATES’ RIGHTS AND OTHER

18 LAWS.— 

19 (1) IN GENERAL.—Any issue that is not gov20 erned by a provision of law established by or under 

21 this subtitle (including the State standards of neg22 ligence) shall be governed by otherwise applicable 

23 Federal or State law. 

24 (2) RULE OF CONSTRUCTION.—Nothing in this 

25 subtitle shall be construed to— 


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1 (A) preempt or supersede any Federal or 

2 State law that imposes greater procedural or 

3 substantive protections (such as a shorter stat4 ute of limitations) for a health care provider or 

5 health care institution from liability, loss, or 

6 damages than those provided by this subtitle; 

7 (B) preempt or supercede any State law 

8 that permits and provides for the enforcement 

9 of any arbitration agreement related to a health 

10 care liability claim whether enacted prior to or 

11 after the date of enactment of this subtitle; 

12 (C) create a cause of action that is not 

13 otherwise available under Federal or State law; 

14 or 

15 (D) affect the scope of preemption of any 

16 other Federal law. 

17 SEC. 132. APPLICABILITY; EFFECTIVE DATE. 

18 This subtitle shall apply to any health care lawsuit 

19 brought in a Federal or State court, or subject to an alter20 native dispute resolution system, that is initiated on or 

21 after the date of the enactment of this subtitle, except that 

22 any health care lawsuit arising from an injury occurring 

23 prior to the date of enactment of this subtitle shall be gov24 erned by the applicable statute of limitations provisions 

25 in effect at the time the injury occurred. 


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1 TITLE II—ENHANCEMENT OF IN2 SURANCE MARKETS FOR ALL 

3 AMERICANS 

4 Subtitle A—Elimination of Barriers 

5 SEC. 201. SHORT TITLE. 

6 This title may be cited as ‘‘Health Care Choice Act 

7 of 2009’’. 

8 SEC. 202. SPECIFICATION OF CONSTITUTIONAL AUTHORITY 

9 FOR ENACTMENT OF LAW. 

10 This title is enacted pursuant to the power granted 

11 Congress under article I, section 8, clause 3, of the United 

12 States Constitution. 

13 SEC. 203. FINDINGS. 

14 Congress finds the following: 

15 (1) The application of numerous and significant 

16 variations in State law impacts the ability of insur17 ers to offer, and individuals to obtain, affordable in18 dividual health insurance coverage, thereby impeding 

19 commerce in individual health insurance coverage. 

20 (2) Individual health insurance coverage is in21 creasingly offered through the Internet, other elec22 tronic means, and by mail, all of which are inher23 ently part of interstate commerce. 

24 (3) In response to these issues, it is appropriate 

25 to encourage increased efficiency in the offering of 


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1 individual health insurance coverage through a col2 laborative approach by the States in regulating this 

3 coverage. 

4 (4) The establishment of risk-retention groups 

5 has provided a successful model for the sale of insur6 ance across State lines, as the acts establishing 

7 those groups allow insurance to be sold in multiple 

8 States but regulated by a single State. 

9 SEC. 204. COOPERATIVE GOVERNING OF INDIVIDUAL 

10 HEALTH INSURANCE COVERAGE. 

11 (a) IN GENERAL.—Title XXVII of the Public Health 

12 Service Act (42 U.S.C. 300gg et seq.) is amended by add13 ing at the end the following new part: 

14 ‘‘PART D—COOPERATIVE GOVERNING OF 

15 INDIVIDUAL HEALTH INSURANCE COVERAGE 

16 ‘‘SEC. 2795. DEFINITIONS. 

17 ‘‘In this part: 

18 ‘‘(1) PRIMARY STATE.—The term ‘primary 

19 State’ means, with respect to individual health insur20 ance coverage offered by a health insurance issuer, 

21 the State designated by the issuer as the State 

22 whose covered laws shall govern the health insurance 

23 issuer in the sale of such coverage under this part. 

24 An issuer, with respect to a particular policy, may 

25 only designate one such State as its primary State 


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1 with respect to all such coverage it offers. Such an 

2 issuer may not change the designated primary State 

3 with respect to individual health insurance coverage 

4 once the policy is issued, except that such a change 

5 may be made upon renewal of the policy. With re6 spect to such designated State, the issuer is deemed 

7 to be doing business in that State. 

8 ‘‘(2) SECONDARY STATE.—The term ‘secondary 

9 State’ means, with respect to individual health insur10 ance coverage offered by a health insurance issuer, 

11 any State that is not the primary State. In the case 

12 of a health insurance issuer that is selling a policy 

13 in, or to a resident of, a secondary State, the issuer 

14 is deemed to be doing business in that secondary 

15 State. 

16 ‘‘(3) HEALTH INSURANCE ISSUER.—The term 

17 ‘health insurance issuer’ has the meaning given such 

18 term in section 2791(b)(2), except that such an 

19 issuer must be licensed in the primary State and be 

20 qualified to sell individual health insurance coverage 

21 in that State. 

22 ‘‘(4) INDIVIDUAL HEALTH INSURANCE COV23 ERAGE.—The term ‘individual health insurance cov24 erage’ means health insurance coverage offered in 


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1 the individual market, as defined in section 

2 2791(e)(1). 

3 ‘‘(5) APPLICABLE STATE AUTHORITY.—The 

4 term ‘applicable State authority’ means, with respect 

5 to a health insurance issuer in a State, the State in6 surance commissioner or official or officials des7 ignated by the State to enforce the requirements of 

8 this title for the State with respect to the issuer. 

9 ‘‘(6) HAZARDOUS FINANCIAL CONDITION.—The 

10 term ‘hazardous financial condition’ means that, 

11 based on its present or reasonably anticipated finan12 cial condition, a health insurance issuer is unlikely 

13 to be able— 

14 ‘‘(A) to meet obligations to policyholders 

15 with respect to known claims and reasonably 

16 anticipated claims; or 

17 ‘‘(B) to pay other obligations in the normal 

18 course of business. 

19 ‘‘(7) COVERED LAWS.— 

20 ‘‘(A) IN GENERAL.—The term ‘covered 

21 laws’ means the laws, rules, regulations, agree22 ments, and orders governing the insurance busi23 ness pertaining to— 

24 ‘‘(i) individual health insurance cov25 erage issued by a health insurance issuer; 


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1 ‘‘(ii) the offer, sale, rating (including 

2 medical underwriting), renewal, and 

3 issuance of individual health insurance cov4 erage to an individual; 

5 ‘‘(iii) the provision to an individual in 

6 relation to individual health insurance cov7 erage of health care and insurance related 

8 services; 

9 ‘‘(iv) the provision to an individual in 

10 relation to individual health insurance cov11 erage of management, operations, and in12 vestment activities of a health insurance 

13 issuer; and 

14 ‘‘(v) the provision to an individual in 

15 relation to individual health insurance cov16 erage of loss control and claims adminis17 tration for a health insurance issuer with 

18 respect to liability for which the issuer pro19 vides insurance. 

20 ‘‘(B) EXCEPTION.—Such term does not in21 clude any law, rule, regulation, agreement, or 

22 order governing the use of care or cost manage23 ment techniques, including any requirement re24 lated to provider contracting, network access or 


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1 adequacy, health care data collection, or quality 

2 assurance. 

3 ‘‘(8) STATE.—The term ‘State’ means the 50 

4 States and includes the District of Columbia, Puerto 

5 Rico, the Virgin Islands, Guam, American Samoa, 

6 and the Northern Mariana Islands. 

7 ‘‘(9) UNFAIR CLAIMS SETTLEMENT PRAC8 TICES.—The term ‘unfair claims settlement prac9 tices’ means only the following practices: 

10 ‘‘(A) Knowingly misrepresenting to claim11 ants and insured individuals relevant facts or 

12 policy provisions relating to coverage at issue. 

13 ‘‘(B) Failing to acknowledge with reason14 able promptness pertinent communications with 

15 respect to claims arising under policies. 

16 ‘‘(C) Failing to adopt and implement rea17 sonable standards for the prompt investigation 

18 and settlement of claims arising under policies. 

19 ‘‘(D) Failing to effectuate prompt, fair, 

20 and equitable settlement of claims submitted in 

21 which liability has become reasonably clear. 

22 ‘‘(E) Refusing to pay claims without con23 ducting a reasonable investigation. 

24 ‘‘(F) Failing to affirm or deny coverage of 

25 claims within a reasonable period of time after 


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1 having completed an investigation related to 

2 those claims. 

3 ‘‘(G) A pattern or practice of compelling 

4 insured individuals or their beneficiaries to in5 stitute suits to recover amounts due under its 

6 policies by offering substantially less than the 

7 amounts ultimately recovered in suits brought 

8 by them. 

9 ‘‘(H) A pattern or practice of attempting 

10 to settle or settling claims for less than the 

11 amount that a reasonable person would believe 

12 the insured individual or his or her beneficiary 

13 was entitled by reference to written or printed 

14 advertising material accompanying or made 

15 part of an application. 

16 ‘‘(I) Attempting to settle or settling claims 

17 on the basis of an application that was materi18 ally altered without notice to, or knowledge or 

19 consent of, the insured. 

20 ‘‘(J) Failing to provide forms necessary to 

21 present claims within 15 calendar days of a re22 quests with reasonable explanations regarding 

23 their use. 


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1 ‘‘(K) Attempting to cancel a policy in less 

2 time than that prescribed in the policy or by the 

3 law of the primary State. 

4 ‘‘(10) FRAUD AND ABUSE.—The term ‘fraud 

5 and abuse’ means an act or omission committed by 

6 a person who, knowingly and with intent to defraud, 

7 commits, or conceals any material information con8 cerning, one or more of the following: 

9 ‘‘(A) Presenting, causing to be presented 

10 or preparing with knowledge or belief that it 

11 will be presented to or by an insurer, a rein12 surer, broker or its agent, false information as 

13 part of, in support of or concerning a fact ma14 terial to one or more of the following: 

15 ‘‘(i) An application for the issuance or 

16 renewal of an insurance policy or reinsur17 ance contract. 

18 ‘‘(ii) The rating of an insurance policy 

19 or reinsurance contract. 

20 ‘‘(iii) A claim for payment or benefit 

21 pursuant to an insurance policy or reinsur22 ance contract. 

23 ‘‘(iv) Premiums paid on an insurance 

24 policy or reinsurance contract. 


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1 ‘‘(v) Payments made in accordance 

2 with the terms of an insurance policy or 

3 reinsurance contract. 

4 ‘‘(vi) A document filed with the com5 missioner or the chief insurance regulatory 

6 official of another jurisdiction. 

7 ‘‘(vii) The financial condition of an in8 surer or reinsurer. 

9 ‘‘(viii) The formation, acquisition, 

10 merger, reconsolidation, dissolution or 

11 withdrawal from one or more lines of in12 surance or reinsurance in all or part of a 

13 State by an insurer or reinsurer. 

14 ‘‘(ix) The issuance of written evidence 

15 of insurance. 

16 ‘‘(x) The reinstatement of an insur17 ance policy. 

18 ‘‘(B) Solicitation or acceptance of new or 

19 renewal insurance risks on behalf of an insurer 

20 reinsurer or other person engaged in the busi21 ness of insurance by a person who knows or 

22 should know that the insurer or other person 

23 responsible for the risk is insolvent at the time 

24 of the transaction. 


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1 ‘‘(C) Transaction of the business of insur2 ance in violation of laws requiring a license, cer3 tificate of authority, or other legal authority for 

4 the transaction of the business of insurance. 

5 ‘‘(D) Attempt to commit, aiding or abet6 ting in the commission of, or conspiracy to com7 mit the acts or omissions specified in this para8 graph. 

9 ‘‘SEC. 2796. APPLICATION OF LAW. 

10 ‘‘(a) IN GENERAL.—The covered laws of the primary 

11 State shall apply to individual health insurance coverage 

12 offered by a health insurance issuer in the primary State 

13 and in any secondary State, but only if the coverage and 

14 issuer comply with the conditions of this section with re15 spect to the offering of coverage in any secondary State. 

16 ‘‘(b) EXEMPTIONS FROM COVERED LAWS IN A SEC17 ONDARY STATE.—Except as provided in this section, a 

18 health insurance issuer with respect to its offer, sale, rat19 ing (including medical underwriting), renewal, and 

20 issuance of individual health insurance coverage in any 

21 secondary State is exempt from any covered laws of the 

22 secondary State (and any rules, regulations, agreements, 

23 or orders sought or issued by such State under or related 

24 to such covered laws) to the extent that such laws would— 


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1 ‘‘(1) make unlawful, or regulate, directly or in2 directly, the operation of the health insurance issuer 

3 operating in the secondary State, except that any 

4 secondary State may require such an issuer— 

5 ‘‘(A) to pay, on a nondiscriminatory basis, 

6 applicable premium and other taxes (including 

7 high risk pool assessments) which are levied on 

8 insurers and surplus lines insurers, brokers, or 

9 policyholders under the laws of the State; 

10 ‘‘(B) to register with and designate the 

11 State insurance commissioner as its agent solely 

12 for the purpose of receiving service of legal doc13 uments or process; 

14 ‘‘(C) to submit to an examination of its fi15 nancial condition by the State insurance com16 missioner in any State in which the issuer is 

17 doing business to determine the issuer’s finan18 cial condition, if— 

19 ‘‘(i) the State insurance commissioner 

20 of the primary State has not done an ex21 amination within the period recommended 

22 by the National Association of Insurance 

23 Commissioners; and 

24 ‘‘(ii) any such examination is con25 ducted in accordance with the examiners’ 


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1 handbook of the National Association of 

2 Insurance Commissioners and is coordi3 nated to avoid unjustified duplication and 

4 unjustified repetition; 

5 ‘‘(D) to comply with a lawful order 

6 issued— 

7 ‘‘(i) in a delinquency proceeding com8 menced by the State insurance commis9 sioner if there has been a finding of finan10 cial impairment under subparagraph (C); 

11 or 

12 ‘‘(ii) in a voluntary dissolution pro13 ceeding; 

14 ‘‘(E) to comply with an injunction issued 

15 by a court of competent jurisdiction, upon a pe16 tition by the State insurance commissioner al17 leging that the issuer is in hazardous financial 

18 condition; 

19 ‘‘(F) to participate, on a nondiscriminatory 

20 basis, in any insurance insolvency guaranty as21 sociation or similar association to which a 

22 health insurance issuer in the State is required 

23 to belong; 

24 ‘‘(G) to comply with any State law regard25 ing fraud and abuse (as defined in section 


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1 2795(10)), except that if the State seeks an in2 junction regarding the conduct described in this 

3 subparagraph, such injunction must be obtained 

4 from a court of competent jurisdiction; 

5 ‘‘(H) to comply with any State law regard6 ing unfair claims settlement practices (as de7 fined in section 2795(9)); or 

8 ‘‘(I) to comply with the applicable require9 ments for independent review under section 

10 2798 with respect to coverage offered in the 

11 State; 

12 ‘‘(2) require any individual health insurance 

13 coverage issued by the issuer to be countersigned by 

14 an insurance agent or broker residing in that Sec15 ondary State; or 

16 ‘‘(3) otherwise discriminate against the issuer 

17 issuing insurance in both the primary State and in 

18 any secondary State. 

19 ‘‘(c) CLEAR AND CONSPICUOUS DISCLOSURE.—A 

20 health insurance issuer shall provide the following notice, 

21 in 12-point bold type, in any insurance coverage offered 

22 in a secondary State under this part by such a health in23 surance issuer and at renewal of the policy, with the 5 

24 blank spaces therein being appropriately filled with the 

25 name of the health insurance issuer, the name of primary 


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1 State, the name of the secondary State, the name of the 

2 secondary State, and the name of the secondary State, re3 spectively, for the coverage concerned: 

4 ‘‘ ‘This policy is issued by lllll and is governed 

5 by the laws and regulations of the State of lllll, 

6 and it has met all the laws of that State as determined 

7 by that State’s Department of Insurance. This policy may 

8 be less expensive than others because it is not subject to 

9 all of the insurance laws and regulations of the State of 

10 lllll, including coverage of some services or bene11 fits mandated by the law of the State of lllll. Ad12 ditionally, this policy is not subject to all of the consumer 

13 protection laws or restrictions on rate changes of the State 

14 of lllll. As with all insurance products, before pur15 chasing this policy, you should carefully review the policy 

16 and determine what health care services the policy covers 

17 and what benefits it provides, including any exclusions, 

18 limitations, or conditions for such services or benefits.’ 

19 ‘‘(d) PROHIBITION ON CERTAIN RECLASSIFICATIONS

20 AND PREMIUM INCREASES.— 

21 ‘‘(1) IN GENERAL.—For purposes of this sec22 tion, a health insurance issuer that provides indi23 vidual health insurance coverage to an individual 

24 under this part in a primary or secondary State may 

25 not upon renewal— 


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1 ‘‘(A) move or reclassify the individual in2 sured under the health insurance coverage from 

3 the class such individual is in at the time of 

4 issue of the contract based on the health-status 

5 related factors of the individual; or 

6 ‘‘(B) increase the premiums assessed the 

7 individual for such coverage based on a health 

8 status-related factor or change of a health sta9 tus-related factor or the past or prospective 

10 claim experience of the insured individual. 

11 ‘‘(2) CONSTRUCTION.—Nothing in paragraph 

12 (1) shall be construed to prohibit a health insurance 

13 issuer— 

14 ‘‘(A) from terminating or discontinuing 

15 coverage or a class of coverage in accordance 

16 with subsections (b) and (c) of section 2742; 

17 ‘‘(B) from raising premium rates for all 

18 policy holders within a class based on claims ex19 perience; 

20 ‘‘(C) from changing premiums or offering 

21 discounted premiums to individuals who engage 

22 in wellness activities at intervals prescribed by 

23 the issuer, if such premium changes or incen24 tives— 


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1 ‘‘(i) are disclosed to the consumer in 

2 the insurance contract; 

3 ‘‘(ii) are based on specific wellness ac4 tivities that are not applicable to all indi5 viduals; and 

6 ‘‘(iii) are not obtainable by all individ7 uals to whom coverage is offered; 

8 ‘‘(D) from reinstating lapsed coverage; or 

9 ‘‘(E) from retroactively adjusting the rates 

10 charged an insured individual if the initial rates 

11 were set based on material misrepresentation by 

12 the individual at the time of issue. 

13 ‘‘(e) PRIOR OFFERING OF POLICY IN PRIMARY

14 STATE.—A health insurance issuer may not offer for sale 

15 individual health insurance coverage in a secondary State 

16 unless that coverage is currently offered for sale in the 

17 primary State. 

18 ‘‘(f) LICENSING OF AGENTS OR BROKERS FOR

19 HEALTH INSURANCE ISSUERS.—Any State may require 

20 that a person acting, or offering to act, as an agent or 

21 broker for a health insurance issuer with respect to the 

22 offering of individual health insurance coverage obtain a 

23 license from that State, with commissions or other com24 pensation subject to the provisions of the laws of that 

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1 tion or requirement which discriminates against a non2 resident agent or broker. 

3 ‘‘(g) DOCUMENTS FOR SUBMISSION TO STATE IN4 SURANCE COMMISSIONER.—Each health insurance issuer 

5 issuing individual health insurance coverage in both pri6 mary and secondary States shall submit— 

7 ‘‘(1) to the insurance commissioner of each 

8 State in which it intends to offer such coverage, be9 fore it may offer individual health insurance cov10 erage in such State— 

11 ‘‘(A) a copy of the plan of operation or fea12 sibility study or any similar statement of the 

13 policy being offered and its coverage (which 

14 shall include the name of its primary State and 

15 its principal place of business); 

16 ‘‘(B) written notice of any change in its 

17 designation of its primary State; and 

18 ‘‘(C) written notice from the issuer of the 

19 issuer’s compliance with all the laws of the pri20 mary State; and 

21 ‘‘(2) to the insurance commissioner of each sec22 ondary State in which it offers individual health in23 surance coverage, a copy of the issuer’s quarterly fi24 nancial statement submitted to the primary State, 

25 which statement shall be certified by an independent 


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1 public accountant and contain a statement of opin2 ion on loss and loss adjustment expense reserves 

3 made by— 

4 ‘‘(A) a member of the American Academy 

5 of Actuaries; or 

6 ‘‘(B) a qualified loss reserve specialist. 

7 ‘‘(h) POWER OF COURTS TO ENJOIN CONDUCT.— 

8 Nothing in this section shall be construed to affect the 

9 authority of any Federal or State court to enjoin— 

10 ‘‘(1) the solicitation or sale of individual health 

11 insurance coverage by a health insurance issuer to 

12 any person or group who is not eligible for such in13 surance; or 

14 ‘‘(2) the solicitation or sale of individual health 

15 insurance coverage that violates the requirements of 

16 the law of a secondary State which are described in 

17 subparagraphs (A) through (H) of section 

18 2796(b)(1). 

19 ‘‘(i) POWER OF SECONDARY STATES TO TAKE AD20 MINISTRATIVE ACTION.—Nothing in this section shall be 

21 construed to affect the authority of any State to enjoin 

22 conduct in violation of that State’s laws described in sec23 tion 2796(b)(1). 

24 ‘‘(j) STATE POWERS TO ENFORCE STATE LAWS.— 


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1 ‘‘(1) IN GENERAL.—Subject to the provisions of 

2 subsection (b)(1)(G) (relating to injunctions) and 

3 paragraph (2), nothing in this section shall be con4 strued to affect the authority of any State to make 

5 use of any of its powers to enforce the laws of such 

6 State with respect to which a health insurance issuer 

7 is not exempt under subsection (b). 

8 ‘‘(2) COURTS OF COMPETENT JURISDICTION.— 

9 If a State seeks an injunction regarding the conduct 

10 described in paragraphs (1) and (2) of subsection 

11 (h), such injunction must be obtained from a Fed12 eral or State court of competent jurisdiction. 

13 ‘‘(k) STATES’ AUTHORITY TO SUE.—Nothing in this 

14 section shall affect the authority of any State to bring ac15 tion in any Federal or State court. 

16 ‘‘(l) GENERALLY APPLICABLE LAWS.—Nothing in 

17 this section shall be construed to affect the applicability 

18 of State laws generally applicable to persons or corpora19 tions. 

20 ‘‘(m) GUARANTEED AVAILABILITY OF COVERAGE TO

21 HIPAA ELIGIBLE INDIVIDUALS.—To the extent that a 

22 health insurance issuer is offering coverage in a primary 

23 State that does not accommodate residents of secondary 

24 States or does not provide a working mechanism for resi25 dents of a secondary State, and the issuer is offering covVerDate Nov 24 2008 04:18 Jun 24, 2009 Jkt 079200 PO 00000 Frm 00067 Fmt 6652 Sfmt 6201 E:\BILLS\S1324.IS S1324

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1 erage under this part in such secondary State which has 

2 not adopted a qualified high risk pool as its acceptable 

3 alternative mechanism (as defined in section 2744(c)(2)), 

4 the issuer shall, with respect to any individual health in5 surance coverage offered in a secondary State under this 

6 part, comply with the guaranteed availability requirements 

7 for eligible individuals in section 2741. 

8 ‘‘SEC. 2797. PRIMARY STATE MUST MEET FEDERAL FLOOR 

9 BEFORE ISSUER MAY SELL INTO SECONDARY 

10 STATES. 

11 ‘‘A health insurance issuer may not offer, sell, or 

12 issue individual health insurance coverage in a secondary 

13 State if the State insurance commissioner does not use 

14 a risk-based capital formula for the determination of cap15 ital and surplus requirements for all health insurance 

16 issuers. 

17 ‘‘SEC. 2798. INDEPENDENT EXTERNAL APPEALS PROCE18 DURES. 

19 ‘‘(a) RIGHT TO EXTERNAL APPEAL.—A health insur20 ance issuer may not offer, sell, or issue individual health 

21 insurance coverage in a secondary State under the provi22 sions of this title unless— 

23 ‘‘(1) both the secondary State and the primary 

24 State have legislation or regulations in place estab25 lishing an independent review process for individuals 


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1 who are covered by individual health insurance cov2 erage, or 

3 ‘‘(2) in any case in which the requirements of 

4 subparagraph (A) are not met with respect to the ei5 ther of such States, the issuer provides an inde6 pendent review mechanism substantially identical (as 

7 determined by the applicable State authority of such 

8 State) to that prescribed in the ‘Health Carrier Ex9 ternal Review Model Act’ of the National Association 

10 of Insurance Commissioners for all individuals who 

11 purchase insurance coverage under the terms of this 

12 part, except that, under such mechanism, the review 

13 is conducted by an independent medical reviewer, or 

14 a panel of such reviewers, with respect to whom the 

15 requirements of subsection (b) are met. 

16 ‘‘(b) QUALIFICATIONS OF INDEPENDENT MEDICAL

17 REVIEWERS.—In the case of any independent review 

18 mechanism referred to in subsection (a)(2)— 

19 ‘‘(1) IN GENERAL.—In referring a denial of a 

20 claim to an independent medical reviewer, or to any 

21 panel of such reviewers, to conduct independent 

22 medical review, the issuer shall ensure that— 

23 ‘‘(A) each independent medical reviewer 

24 meets the qualifications described in paragraphs 

25 (2) and (3); 


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1 ‘‘(B) with respect to each review, each re2 viewer meets the requirements of paragraph (4) 

3 and the reviewer, or at least 1 reviewer on the 

4 panel, meets the requirements described in 

5 paragraph (5); and 

6 ‘‘(C) compensation provided by the issuer 

7 to each reviewer is consistent with paragraph 

8 (6). 

9 ‘‘(2) LICENSURE AND EXPERTISE.—Each inde10 pendent medical reviewer shall be a physician 

11 (allopathic or osteopathic) or health care profes12 sional who— 

13 ‘‘(A) is appropriately credentialed or li14 censed in 1 or more States to deliver health 

15 care services; and 

16 ‘‘(B) typically treats the condition, makes 

17 the diagnosis, or provides the type of treatment 

18 under review. 

19 ‘‘(3) INDEPENDENCE.— 

20 ‘‘(A) IN GENERAL.—Subject to subpara21 graph (B), each independent medical reviewer 

22 in a case shall— 

23 ‘‘(i) not be a related party (as defined 

24 in paragraph (7)); 


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1 ‘‘(ii) not have a material familial, fi2 nancial, or professional relationship with 

3 such a party; and 

4 ‘‘(iii) not otherwise have a conflict of 

5 interest with such a party (as determined 

6 under regulations). 

7 ‘‘(B) EXCEPTION.—Nothing in subpara8 graph (A) shall be construed to— 

9 ‘‘(i) prohibit an individual, solely on 

10 the basis of affiliation with the issuer, 

11 from serving as an independent medical re12 viewer if— 

13 ‘‘(I) a non-affiliated individual is 

14 not reasonably available; 

15 ‘‘(II) the affiliated individual is 

16 not involved in the provision of items 

17 or services in the case under review; 

18 ‘‘(III) the fact of such an affili19 ation is disclosed to the issuer and the 

20 enrollee (or authorized representative) 

21 and neither party objects; and 

22 ‘‘(IV) the affiliated individual is 

23 not an employee of the issuer and 

24 does not provide services exclusively or 

25 primarily to or on behalf of the issuer; 


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1 ‘‘(ii) prohibit an individual who has 

2 staff privileges at the institution where the 

3 treatment involved takes place from serv4 ing as an independent medical reviewer 

5 merely on the basis of such affiliation if 

6 the affiliation is disclosed to the issuer and 

7 the enrollee (or authorized representative), 

8 and neither party objects; or 

9 ‘‘(iii) prohibit receipt of compensation 

10 by an independent medical reviewer from 

11 an entity if the compensation is provided 

12 consistent with paragraph (6). 

13 ‘‘(4) PRACTICING HEALTH CARE PROFESSIONAL

14 IN SAME FIELD.— 

15 ‘‘(A) IN GENERAL.—In a case involving 

16 treatment, or the provision of items or serv17 ices— 

18 ‘‘(i) by a physician, a reviewer shall be 

19 a practicing physician (allopathic or osteo20 pathic) of the same or similar specialty, as 

21 a physician who, acting within the appro22 priate scope of practice within the State in 

23 which the service is provided or rendered, 

24 typically treats the condition, makes the 


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1 diagnosis, or provides the type of treat2 ment under review; or 

3 ‘‘(ii) by a non-physician health care 

4 professional, the reviewer, or at least 1 

5 member of the review panel, shall be a 

6 practicing non-physician health care pro7 fessional of the same or similar specialty 

8 as the non-physician health care profes9 sional who, acting within the appropriate 

10 scope of practice within the State in which 

11 the service is provided or rendered, typi12 cally treats the condition, makes the diag13 nosis, or provides the type of treatment 

14 under review. 

15 ‘‘(B) PRACTICING DEFINED.—For pur16 poses of this paragraph, the term ‘practicing’ 

17 means, with respect to an individual who is a 

18 physician or other health care professional, that 

19 the individual provides health care services to 

20 individual patients on average at least 2 days 

21 per week. 

22 ‘‘(5) PEDIATRIC EXPERTISE.—In the case of an 

23 external review relating to a child, a reviewer shall 

24 have expertise under paragraph (2) in pediatrics. 


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1 ‘‘(6) LIMITATIONS ON REVIEWER COMPENSA2 TION.—Compensation provided by the issuer to an 

3 independent medical reviewer in connection with a 

4 review under this section shall— 

5 ‘‘(A) not exceed a reasonable level; and 

6 ‘‘(B) not be contingent on the decision ren7 dered by the reviewer. 

8 ‘‘(7) RELATED PARTY DEFINED.—For purposes 

9 of this section, the term ‘related party’ means, with 

10 respect to a denial of a claim under a coverage relat11 ing to an enrollee, any of the following: 

12 ‘‘(A) The issuer involved, or any fiduciary, 

13 officer, director, or employee of the issuer. 

14 ‘‘(B) The enrollee (or authorized represent15 ative). 

16 ‘‘(C) The health care professional that pro17 vides the items or services involved in the de18 nial. 

19 ‘‘(D) The institution at which the items or 

20 services (or treatment) involved in the denial 

21 are provided. 

22 ‘‘(E) The manufacturer of any drug or 

23 other item that is included in the items or serv24 ices involved in the denial. 


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1 ‘‘(F) Any other party determined under 

2 any regulations to have a substantial interest in 

3 the denial involved. 

4 ‘‘(8) DEFINITIONS.—For purposes of this sub5 section: 

6 ‘‘(A) ENROLLEE.—The term ‘enrollee’ 

7 means, with respect to health insurance cov8 erage offered by a health insurance issuer, an 

9 individual enrolled with the issuer to receive 

10 such coverage. 

11 ‘‘(B) HEALTH CARE PROFESSIONAL.—The 

12 term ‘health care professional’ means an indi13 vidual who is licensed, accredited, or certified 

14 under State law to provide specified health care 

15 services and who is operating within the scope 

16 of such licensure, accreditation, or certification. 

17 ‘‘SEC. 2799. ENFORCEMENT. 

18 ‘‘(a) IN GENERAL.—Subject to subsection (b), with 

19 respect to specific individual health insurance coverage the 

20 primary State for such coverage has sole jurisdiction to 

21 enforce the primary State’s covered laws in the primary 

22 State and any secondary State. 

23 ‘‘(b) SECONDARY STATE’S AUTHORITY.—Nothing in 

24 subsection (a) shall be construed to affect the authority 


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1 of a secondary State to enforce its laws as set forth in 

2 the exception specified in section 2796(b)(1). 

3 ‘‘(c) COURT INTERPRETATION.—In reviewing action 

4 initiated by the applicable secondary State authority, the 

5 court of competent jurisdiction shall apply the covered 

6 laws of the primary State. 

7 ‘‘(d) NOTICE OF COMPLIANCE FAILURE.—In the case 

8 of individual health insurance coverage offered in a sec9 ondary State that fails to comply with the covered laws 

10 of the primary State, the applicable State authority of the 

11 secondary State may notify the applicable State authority 

12 of the primary State.’’. 

13 (b) EFFECTIVE DATE.—The amendment made by 

14 subsection (a) shall apply to individual health insurance 

15 coverage offered, issued, or sold after the date that is one 

16 year after the date of the enactment of this Act. 

17 (c) GAO ONGOING STUDY AND REPORTS.— 

18 (1) STUDY.—The Comptroller General of the 

19 United States shall conduct an ongoing study con20 cerning the effect of the amendment made by sub21 section (a) on— 

22 (A) the number of uninsured and under-in23 sured; 


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1 (B) the availability and cost of health in2 surance policies for individuals with pre-existing 

3 medical conditions; 

4 (C) the availability and cost of health in5 surance policies generally; 

6 (D) the elimination or reduction of dif7 ferent types of benefits under health insurance 

8 policies offered in different States; and 

9 (E) cases of fraud or abuse relating to 

10 health insurance coverage offered under such 

11 amendment and the resolution of such cases. 

12 (2) ANNUAL REPORTS.—The Comptroller Gen13 eral shall submit to Congress an annual report, after 

14 the end of each of the 5 years following the effective 

15 date of the amendment made by subsection (a), on 

16 the ongoing study conducted under paragraph (1). 

17 SEC. 205. SEVERABILITY. 

18 If any provision of the Act or the application of such 

19 provision to any person or circumstance is held to be un20 constitutional, the remainder of this Act and the applica21 tion of the provisions of such to any other person or cir22 cumstance shall not be affected. 


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1 Subtitle B—Pre-existing Condition 

2 SEC. 211. BLOCK GRANTS TO STATES. 

3 (a) IN GENERAL.—The Secretary of Health and 

4 Human Services (referred to in this section as the ‘‘Sec5 retary’’) shall award block grants to States to provide for 

6 the development of innovative models that ensure afford7 able health insurance coverage for Americans with pre-ex8 isting health conditions. 

9 (b) APPLICATION.—To be eligible to receive a grant 

10 under this section a State shall submit to the Secretary 

11 an application, at such time, in such manner, and con12 taining such information as the Secretary may require. 

13 (c) USE OF FUNDS.—A State shall use amounts re14 ceived under a grant under this section to develop innova15 tive programs that ensure the provision of affordable 

16 health insurance coverage for eligible individuals with pre17 existing health conditions. Such models may include the 

18 development and funding of State high-risk pools and the 

19 enhancement of funding for existing State high risk pools. 

20 (d) ELIGIBILITY.—To be eligible to participate in a 

21 program developed under subsection (c), an individual 

22 shall— 

23 (1) be a resident of the State involved; 

24 (2) provide assurances to the Secretary that ac25 tivities carried out under the grant will not result in 


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1 an increase in health insurance premiums for resi2 dents of the State; and 

3 (3) comply with any other requirements estab4 lished by the State. 

5 (e) AMOUNT OF GRANT.—The amount of a grant to 

6 a State under this section shall be determined by the Sec7 retary. 

8 (f) AUTHORIZATION OF APPROPRIATIONS.—There is 

9 authorized to be appropriated to carry out this section, 

10 $5,000,000,000 for each of the fiscal years 2010 through 

11 2014. 

12 (g) DEFINITION.—In this section, the term ‘‘pre-ex13 isting condition’’ means a medical or other condition in 

14 an individual that exists prior to the date on which such 

15 individuals attempts to enroll in health insurance cov16 erage, whether or not any medical advice, diagnosis, care, 

17 or treatment was recommended or received before such 

18 date. 

19 TITLE III—EMPOWERING THE 

20 HEALTH CARE CONSUMER 

21 SEC. 301. ENHANCING THE PATIENT-PROVIDER RELATION22 SHIP. 

23 (a) PROVISION OF INFORMATION.—The Secretary of 

24 Health and Human Services shall promulgate regulations 

25 under which a health care provider (including a hospital) 


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1 that receives reimbursement under title XVIII or XIX of 

2 the Social Security Act (42 U.S.C. 1395 and 1396 et seq.) 

3 shall be required to provide each patient of such provider 

4 (or hospital), upon the request of such patient, price infor5 mation with respect to the items or services provided (or 

6 that will be provided) to such patient. 

7 (b) REQUIREMENT.—The pricing information re8 quired under subsection (a) shall be broken down into the 

9 following categories: 

10 (1) The usual and customary price charged for 

11 the item or service involved. 

12 (2) The amount that would be provided as re13 imbursement under the Medicare and Medicaid Pro14 grams under titles XVIII and XIX of the Social Se15 curity Act (42 U.S.C. 1395 and 1396 et seq.) for 

16 the items or services involved. 

17 (3) The average amount that would be paid by 

18 an insured individual with respect to such item or 

19 service. 

20 SEC. 302. HEALTH INSURANCE POLICY INFORMATION. 

21 (a) IN GENERAL.—A group health plan, or health in22 surance issuer in connection with group or individual 

23 health insurance coverage, shall provide an enrollee, upon 

24 the request of the enrollee, with information concerning 


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1 their allowable payment for items or services under the 

2 plan or coverage involved. 

3 (b) FEE.—A plan or issuer may assess an enrollee 

4 a reasonable fee to cover the costs incurred by the plan 

5 or issuer in providing the enrollee with the information 

6 requested under subsection (a). 

7 (c) DEFINITIONS.—The definitions contained in sec8 tion 2791 of the Public Health Service Act (42 U.S.C. 

9 300gg–91) shall apply for purposes of this section. 

10 TITLE IV—FUNDING 

11 SEC. 401. FUNDING PROVISIONS. 

12 (a) TERMINATION OF TARP PROGRAM.—Notwith13 standing any provision of the Emergency Economic Sta14 bilization Act of 2008 (12 U.S.C. 5201 et seq.) or any 

15 other provision of law, the Secretary of Treasury may not, 

16 on and after the date of enactment of this Act, make any 

17 payment or obligation under the Emergency Economic 

18 Stabilization Act of 2008 (12 U.S.C. 5201 et seq.). Any 

19 funds made available under such Act that have not been 

20 obligated shall be rescinded and made available to carry 

21 out this Act. 

22 (b) COLLECTING FUNDS.—Notwithstanding any 

23 other provision of the Emergency Economic Stabilization 

24 Act of 2008 (12 U.S.C. 5201 et seq.) or any other provi25 sion of law, the Secretary of Treasury shall collect all reveVerDate Nov 24 2008 04:18 Jun 24, 2009 Jkt 079200 PO 00000 Frm 00081 Fmt 6652 Sfmt 6201 E:\BILLS\S1324.IS S1324

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1 nues relating to, and proceeds from the sale of, obligations 

2 purchased and made under the Emergency Economic Sta3 bilization Act of 2008 (12 U.S.C. 5201 et seq.) by not 

4 later than September 30, 2014, at a rate of not less than 

5 20 percent per year of the total obligations purchased and 

6 made under such Act. 

Æ 


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