I 

111TH CONGRESS 

1ST SESSION H. R. 1498 

To amend the Internal Revenue Code of 1986 to allow individuals a credit 

against income tax for the cost of insurance against negative outcomes 

from surgery, including against malpractice of a physician. 

IN THE HOUSE OF REPRESENTATIVES 

MARCH 12, 2009 

Mr. PAUL introduced the following bill; which was referred to the Committee 

on Ways and Means 

A BILL 

To amend the Internal Revenue Code of 1986 to allow individuals a credit against income tax for the cost of insurance against negative outcomes from surgery, including 

against malpractice of a physician. 

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 ‘‘Freedom From Unnec5 essary Litigation Act of 2009’’. 


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1 SEC. 2. CREDIT FOR PURCHASE BY PATIENT OF INSUR2 ANCE AGAINST NEGATIVE OUTCOMES RE3 SULTING FROM SURGERY. 

4 (a) IN GENERAL.—Subpart A of part IV of sub5 chapter A of chapter 1 of the Internal Revenue Code of 

6 1986 (relating to nonrefundable credits) is amended by 

7 inserting after section 25D the following new section: 

8 ‘‘SEC. 25E. COST OF INSURANCE PURCHASED BY PATIENT 

9 AGAINST NEGATIVE OUTCOMES RESULTING 

10 FROM SURGERY. 

11 ‘‘(a) IN GENERAL.—In the case of an individual, 

12 there shall be allowed as a credit against the tax imposed 

13 by this chapter for the taxable year an amount equal to 

14 the cost of negative outcomes insurance covering the indi15 vidual or the spouse or any dependent (as defined in sec16 tion 152) of the individual. 

17 ‘‘(b) NEGATIVE OUTCOMES INSURANCE.—For pur18 poses of this section, the term ‘negative outcomes insur19 ance’ means insurance covering any negative side effect 

20 of surgery, including those caused by malpractice from the 

21 action or inaction of a physician.’’. 

22 (b) CONFORMIMG AMENDMENT.—The table of sec23 tions for such subpart A of such Code is amended by in24 serting after the item relating to section 25D the following 

25 new item: 


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‘‘Sec. 25E. Cost of insurance purchased by patient against negative outcomes 

resulting from surgery.’’. 

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

2 this section shall apply to taxable years beginning after 

3 the date of the enactment of this Act. 

4 SEC. 3. EXCLUSION FROM GROSS INCOME FOR MEDICAL 

5 MALPRACTICE AWARDS GRANTED IN BIND6 ING ARBITRATION. 

7 (a) IN GENERAL.—Section 104 of the Internal Rev8 enue Code of 1986 (relating to compensation for injuries 

9 or sickness) is amended by redesignated subsection (d) as 

10 subsection (e) and by inserting after subsection (c) the fol11 lowing new subsection: 

12 ‘‘(d) MEDICAL MALPRACTICE BINDING ARBITRATION

13 AWARDS.—In the case of damages awarded for medical 

14 malpractice in binding arbitration, gross income does not 

15 include such damages (whether for lost wages or other16 wise).’’. 

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

18 subsection (a) shall apply to damages awarded after the 

19 date of the enactment of this Act. 

Æ 


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