I 

109TH CONGRESS 

1ST SESSION H. R. 2291 

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

for qualified expenditures for medical professional malpractice insurance. 

IN THE HOUSE OF REPRESENTATIVES 

MAY 11, 2005 

Ms. HERSETH (for herself, Mr. JEFFERSON, Mr. SNYDER, Ms. BERKLEY, Mr. 

HIGGINS, Mr. NADLER, Mr. BOUCHER, Mr. MOORE of Kansas, Mr. 

ISRAEL, Mr. LEWIS of Georgia, Mr. BAIRD, Mr. ROSS, Mr. GENE GREEN

of Texas, Mr. HONDA, Mr. BERRY, Mr. BOSWELL, Mr. CLAY, Mr. GONZALEZ, Ms. KAPTUR, Mr. REYES, Mr. RUPPERSBERGER, Mr. HINOJOSA, 

Mr. DAVIS of Alabama, Mr. THOMPSON of California, Mr. CROWLEY, Mr. 

MEEKS of New York, and Mr. BISHOP of New York) introduced the following bill; which was referred to the Committee on Ways and Means, 

and in addition to the Committee on Energy and Commerce, for a period 

to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee 

concerned 

A BILL 

To amend the Internal Revenue Code of 1986 to allow a 

business credit for qualified expenditures for medical professional malpractice insurance. 

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 ‘‘Medical Malpractice 

5 Relief Act of 2005’’. 
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1 SEC. 2. CREDIT FOR QUALIFIED EXPENDITURES FOR MED2 ICAL PROFESSIONAL MALPRACTICE INSUR3 ANCE. 

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

6 1986 (relating to business tax credits) is amended by add7 ing at the end the following: 

8 ‘‘SEC. 45J. CREDIT FOR EXPENDITURES FOR MEDICAL PRO9 FESSIONAL MALPRACTICE INSURANCE. 

10 ‘‘(a) GENERAL RULE.—For purposes of section 38, 

11 in the case of an eligible person, the medical malpractice 

12 insurance expenditure tax credit determined under this 

13 section for a taxable year is the amount equal to the appli14 cable percentage of qualified medical malpractice insur15 ance expenditures. 

16 ‘‘(b) LIMITATION.— 

17 ‘‘(1) IN GENERAL.—The amount of qualified 

18 medical malpractice insurance expenditures taken 

19 into account under subsection (a) for a taxable year 

20 with respect to an eligible person shall not exceed 

21 the amount equal to twice the average of costs of 

22 qualified medical malpractice insurance for similarly 

23 situated eligible persons. 

24 ‘‘(2) AVERAGE COSTS.—For purposes of para25 graph (1), the Secretary of Health and Human 

26 Services, after consultation with State boards of 
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1 medical licensure and State boards (or agencies) reg2 ulating insurance, shall— 

3 ‘‘(A) determine average costs (rounded to 

4 the nearest whole dollar) of providing or fur5 nishing general medical malpractice liability in6 surance to eligible persons, and 

7 ‘‘(B) certify the amount of such costs to 

8 the Secretary on or before the 15th day of No9 vember of each year. 

10 ‘‘(c) DEFINITIONS AND SPECIAL RULE.—For pur11 poses of this section— 

12 ‘‘(1) QUALIFIED MEDICAL MALPRACTICE INSUR13 ANCE EXPENDITURE.— 

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

15 medical malpractice insurance expenditure’ 

16 means so much of any professional insurance 

17 premium, surcharge, payment, or other cost or 

18 expense which is paid or incurred in the taxable 

19 year by an eligible person for the sole purpose 

20 of providing or furnishing general medical mal21 practice liability insurance for such eligible per22 son. 

23 ‘‘(2) ELIGIBLE PERSON.—The term ‘eligible 

24 person’ means— 
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1 ‘‘(A) any physician (as defined in section 

2 213(d)(4)) who practices in any surgical spe3 cialty or subspecialty, emergency medicine, ob4 stetrics, anesthesiology or who does intervention 

5 work which is reflected in medical malpractice 

6 insurance expenditures, 

7 ‘‘(B) any physician (as so defined) who 

8 practices in general medicine, allergy, derma9 tology, pathology, or any other specialty not 

10 otherwise described in this section, and 

11 ‘‘(C) any hospital, clinic, or long-term care 

12 provider, 

13 which meets applicable legal requirements to provide 

14 the health care services involved. 

15 ‘‘(3) APPLICABLE PERCENTAGE.—The applica16 ble percentage is— 

17 ‘‘(A) 30 percent in the case of a person de18 scribed in paragraph (2)(A), and 

19 ‘‘(B) 20 percent in the case of a person de20 scribed in subparagraph (B) or (C) of para21 graph (2). 

22 ‘‘(4) SIMILARLY SITUATED.—The determination 

23 of whether persons are similarly situated shall be 

24 made on the basis of medical practices primarily lo25 cated within a statistical area (as defined in section 
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1 142(k)(2)) and shall differentiate between specialty 

2 and subspecialty medical practices. 

3 ‘‘(d) ELECTION NOT TO CLAIM CREDIT.—This sec4 tion shall not apply to a taxpayer for any taxable year 

5 if such taxpayer elects to have this section not apply for 

6 such taxable year. 

7 ‘‘(e) TERMINATION.—This section shall not apply to 

8 taxable years beginning after December 31, 2006.’’. 

9 (b) CREDIT MADE PART OF GENERAL BUSINESS

10 CREDIT.—Section 38(b) of such Code (relating to current 

11 year business credit) is amended by striking ‘‘plus’’ at the 

12 end of paragraph (18), by striking the period at the end 

13 of paragraph (19) and inserting ‘‘, plus’’, and by adding 

14 at the end the following new paragraph: 

15 ‘‘(20) the medical malpractice insurance ex16 penditure tax credit determined under section 

17 45J(a).’’. 

18 (c) DENIAL OF DOUBLE BENEFIT.—Section 280C of 

19 such Code (relating to certain expenses for which credits 

20 are allowable) is amended by adding at the end the fol21 lowing new subsection: 

22 ‘‘(e) CREDIT FOR MEDICAL MALPRACTICE LIABILITY

23 INSURANCE PREMIUMS.— 

24 ‘‘(1) IN GENERAL.—No deduction shall be al25 lowed for that portion of the qualified medical mal-
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1 practice insurance expenditures otherwise allowable 

2 as a deduction for the taxable year which is equal 

3 to the amount of the credit allowable for the taxable 

4 year under section 45J (determined without regard 

5 to section 38(c)). 

6 ‘‘(2) CONTROLLED GROUPS.—In the case of a 

7 corporation which is a member of a controlled group 

8 of corporations (within the meaning of section 

9 41(f)(5)) or a trade or business which is treated as 

10 being under common control with other trades or 

11 business (within the meaning of section 

12 41(f)(1)(B)), this subsection shall be applied under 

13 rules prescribed by the Secretary similar to the rules 

14 applicable under subparagraphs (A) and (B) of sec15 tion 41(f)(1).’’. 

16 (d) GRANTS TO NON-PROFIT HOSPITALS, CLINICS, 

17 AND LONG-TERM CARE PROVIDERS.— 

18 (1) IN GENERAL.—The Secretary of Health and 

19 Human Services, acting through the Administrator 

20 of the Health Resources and Services Administra21 tion, shall award grants to eligible non-profit hos22 pitals, clinics, and long-term care providers to assist 

23 such hospitals, clinics, and long-term care providers 

24 in defraying qualified medical malpractice insurance 

25 expenditures. 
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1 (2) ELIGIBLE NON-PROFIT HOSPITAL, CLINIC, 

2 OR LONG-TERM CARE PROVIDER.—To be eligible to 

3 receive a grant under paragraph (1) an entity 

4 shall— 

5 (A) be a non-profit hospital, clinic, or long6 term care provider; 

7 (B) be an organization described in section 

8 501(c) of the Internal Revenue Code of 1986 

9 and exempt from tax under section 501(a) of 

10 such Code for the year for which an application 

11 is submitted under subparagraph (C); and 

12 (C) prepare and submit to the Secretary of 

13 Health and Human Services an application at 

14 such time, in such manner, and containing such 

15 information as the Secretary may require. 

16 (3) AMOUNT OF GRANT.—The amount of a 

17 grant to a non-profit hospital, clinic, or long-term 

18 care provider under paragraph (1) shall equal 15 

19 percent of the amount of the qualified medical mal20 practice insurance expenditures of the hospital, clin21 ic, or long-term care provider for the year involved. 

22 (4) QUALIFIED MEDICAL MALPRACTICE INSUR23 ANCE EXPENDITURE.—In this subsection, the term 

24 ‘‘qualified medical malpractice insurance expendi25 ture’’ means so much of any professional insurance 
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1 premium, surcharge, payment or other cost or ex2 pense which is incurred by a non-profit hospital, 

3 clinic, or long-term care provider in a year for the 

4 sole purpose of providing or furnishing general med5 ical malpractice liability insurance for such hospital, 

6 clinic, or long-term care provider as does not exceed 

7 twice the average of such costs for similarly situated 

8 hospitals, clinics, or long-term care provider homes. 

9 (5) AUTHORIZATION OF APPROPRIATIONS.— 

10 There are authorized to be appropriated to carry out 

11 this subsection such sums as may be necessary for 

12 each of fiscal years 2006 and 2007. 

13 (e) CLERICAL AMENDMENT.—The table of sections 

14 for subpart D of part IV of subchapter A of chapter 1 

15 of such Code is amended by adding at the end the fol16 lowing new item: 

‘‘Sec. 45J. Credit for expenditures for medical professional malpractice insurance.’’. 

17 (f) EFFECTIVE DATE.—The amendments made by 

18 this section shall apply to taxable years beginning after 

19 December 31, 2004. 

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