I 

111TH CONGRESS 

2D SESSION H. R. 5109 

To establish a tax, regulatory, and legal structure in the United States 

that encourages small businesses to expand and innovate, and for other 

purposes. 

IN THE HOUSE OF REPRESENTATIVES 

APRIL 22, 2010 

Mr. KIRK (for himself, Mr. SESSIONS, Mr. LEE of New York, Mr. GERLACH, 

Mr. DENT, Mr. SHIMKUS, Mr. SENSENBRENNER, and Mr. BARTON of 

Texas) introduced the following bill; which was referred to the Committee 

on Ways and Means, and in addition to the Committees on Small Business, Financial Services, Rules, Education and Labor, Energy and Commerce, the Judiciary, Oversight and Government Reform, and Appropriations, 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 establish a tax, regulatory, and legal structure in the 

United States that encourages small businesses to expand and innovate, and for other purposes. 

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

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 

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

5 ‘‘Small Business Bill of Rights’’. 


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1 (b) TABLE OF CONTENTS.—The table of contents for 

2 this Act is as follows: 

Sec. 1. Short title; table of contents. 

Sec. 2. Purpose. 

TITLE I—LOWER TAX ENVIRONMENT 

Subtitle A—Alternative Minimum Tax Relief 

Sec. 101. Extension of alternative minimum tax relief for nonrefundable personal credits. 

Sec. 102. Extension of increased alternative minimum tax exemption amount. 

Subtitle B—Capital Gains 

Sec. 111. Extension of reduction in taxes on dividends and capital gains. 

Sec. 112. Temporary reduction of capital gains tax on qualified small business 

stock. 

Subtitle C—Tax Benefits for Start-Ups 

Sec. 121. Increase in amount allowed as deduction for start-up expenditures. 

Subtitle D—Miscellaneous 

Sec. 131. GAO to certify no burden on small business concerns. 

Sec. 132. Exemption from taxes imposed after the date of enactment of this 

Act. 

TITLE II—LIMITATION ON REGULATIONS 

Sec. 201. Limitation on regulations. 

TITLE III—BUSINESS GROWTH FOR THE NEXT GENERATION 

Sec. 301. Postponement of termination of estate tax and generation-skipping 

transfer taxes. 

TITLE IV—PROTECTING THE SECRET BALLOT 

Sec. 401. Findings. 

Sec. 402. National Labor Relations Act. 

Sec. 403. Regulations. 

TITLE V—HEALTHCARE: EXPANDING CHOICE AND LOWERING 

COSTS 

Sec. 501. Findings and purpose. 

Sec. 502. Encouraging speedy resolution of claims. 

Sec. 503. Compensating patient injury. 

Sec. 504. Maximizing patient recovery. 

Sec. 505. Additional health benefits. 

Sec. 506. Punitive damages. 

Sec. 507. Authorization of payment of future damages to claimants in health 

care lawsuits. 

Sec. 508. Definitions. 

Sec. 509. Effect on other laws. 


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Sec. 510. State flexibility and protection of States’ rights. 

Sec. 511. Applicability; effective date. 

Sec. 512. Sense of congress. 

Sec. 513. Cooperative governing of individual health insurance coverage. 

Sec. 514. SECA tax deduction for health insurance costs. 

TITLE VI—WORKFORCE INTEGRITY 

Sec. 601. E-verify program made permanent. 

Sec. 602. Verification under E-verify program made possible over telephone. 

Sec. 603. Grace period to correct paperwork. 

TITLE VII—INTELLECTUAL PROPERTY PROTECTION 

Sec. 701. Limits on patent legislation. 

Sec. 702. Expedited patent filing procedures for small business concerns. 

TITLE VIII—INCENTIVES FOR ENERGY EFFICIENCY 

Subtitle A—Vehicles 

Sec. 801. Consumer incentives to purchase advanced technology vehicles. 

Subtitle B—Extensions 

Sec. 811. Make permanent the tax credit for residential energy-efficient property. 

Sec. 812. Make permanent the energy efficiency credit for existing homes. 

Sec. 813. Make permanent the energy efficiency commercial buildings deduction. 

TITLE IX—GUIDANCE ABOUT NEW RULES 

Sec. 901. Guidance and advice about new rules. 

TITLE X—SMALL BUSINESS PROVISIONS 

Subtitle A—Small Business General Provisions 

Sec. 1001. Administration prohibited from capping executive compensation. 

Sec. 1002. Reduction of regulatory burden. 

Sec. 1003. Litigation burden on small business concerns to be limited to current levels. 

Sec. 1004. Expansion of volunteer representation and benchmark reports. 

Sec. 1005. Mentoring and networking. 

Sec. 1006. Name of program changed to SCORE. 

Sec. 1007. Authorization of appropriations. 

Subtitle B—Small Business Goals 

Sec. 1011. Small business goals. 

Sec. 1012. Agency goal negotiation. 

Sec. 1013. Procedures and methods for goal achievement. 

Sec. 1014. Reporting requirements. 

Subtitle C—Contract Bundling 

Sec. 1021. Definitions of bundling of contract requirements. 

Sec. 1022. Justification. 


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Sec. 1023. Appeals. 

Sec. 1024. Third-party review. 

Subtitle D—Small Business Subcontracting 

Sec. 1031. Good faith compliance with subcontracting plans. 

Sec. 1032. Limitations on subcontracting. 

Sec. 1033. Criminal violations. 

TITLE XI—OFFSETS 

Sec. 1101. Transfer of unobligated stimulus funds. 

TITLE XII—DEBT REDUCTION 

Sec. 1201. Repeal of the Troubled Asset Relief Program. 

TITLE XIII—DEFINITIONS 

Sec. 1301. Definitions. 

1 SEC. 2. PURPOSE. 

2 The purpose of this Act is to do the following: 

3 (1) Protect secret ballots in union elections. 

4 (2) Lower health costs with lawsuit reforms and 

5 interstate competition. 

6 (3) Lower energy costs with credits for efficient 

7 equipment and hybrids. 

8 (4) Permit children to continue business with 

9 low/no death tax. 

10 (5) Exempt small businesses from capital gains 

11 tax for 10 years. 

12 (6) Make immigration laws easy to comply with. 

13 (7) Create a Patent Office fast lane for small 

14 business innovation.

15 (8) SBA to limit Federal paperwork for small 

16 businesses to 200 hours annually.

17 (9) Prevent AMT from taxing the middle class. 


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1 (10) Reduce deficit to encourage jobs and im2 prove credit. 

3 TITLE I—LOWER TAX 

4 ENVIRONMENT 

5 Subtitle A—Alternative Minimum 

6 Tax Relief 

7 SEC. 101. EXTENSION OF ALTERNATIVE MINIMUM TAX RE8 LIEF FOR NONREFUNDABLE PERSONAL 

9 CREDITS. 

10 (a) IN GENERAL.—Paragraph (2) of section 26(a) of 

11 the Internal Revenue Code of 1986 (relating to special 

12 rule for taxable years 2000 through 2009) is amended— 

13 (1) by striking ‘‘or 2009’’ and inserting ‘‘2009, 

14 2010, or 2011’’, and 

15 (2) by striking ‘‘2009’’ in the heading thereof 

16 and inserting ‘‘2011’’. 

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

18 this section shall apply to taxable years beginning after 

19 December 31, 2009. 

20 SEC. 102. EXTENSION OF INCREASED ALTERNATIVE MIN21 IMUM TAX EXEMPTION AMOUNT. 

22 (a) IN GENERAL.—Subparagraphs (A) and (B) of 

23 section 55(d)(1) of the Internal Revenue Code of 1986 (re24 lating to exemption amount) are both amended by striking 

25 ‘‘2009’’ and inserting ‘‘2009, 2010, and 2011’’. 


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

2 this section shall apply to taxable years beginning after 

3 December 31, 2009. 

4 Subtitle B—Capital Gains 

5 SEC. 111. EXTENSION OF REDUCTION IN TAXES ON DIVI6 DENDS AND CAPITAL GAINS. 

7 Section 303 of the Jobs and Growth Tax Relief Rec8 onciliation Act of 2003 is amended by striking ‘‘December 

9 31, 2010’’ and inserting ‘‘December 31, 2011’’. 

10 SEC. 112. TEMPORARY REDUCTION OF CAPITAL GAINS TAX 

11 ON QUALIFIED SMALL BUSINESS STOCK. 

12 (a) TEMPORARY REDUCED RATE FOR QUALIFIED

13 SMALL BUSINESS STOCK.—Subparagraph (A)(ii) of sec14 tion 1(h)(4) of the Internal Revenue Code of 1986 is 

15 amended to read as follows: 

16 ‘‘(ii) in the case of any taxable year 

17 beginning after December 31, 2020, sec18 tion 1202 gain, over’’. 

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

20 subsection (a) shall apply to taxable years beginning after 

21 December 31, 2010. 


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1 Subtitle C—Tax Benefits for Start2 Ups 

3 SEC. 121. INCREASE IN AMOUNT ALLOWED AS DEDUCTION 

4 FOR START-UP EXPENDITURES. 

5 (a) IN GENERAL.—Subsection (b) of section 195 of 

6 the Internal Revenue Code of 1986 is amended by adding 

7 at the end the following: 

8 ‘‘(3) SPECIAL RULE FOR TAXABLE YEARS BE9 GINNING IN 2009, 2010, OR 2011.—In the case of a 

10 taxable year beginning in 2009, 2010, or 2011, 

11 paragraph (1)(A)(ii) shall be applied— 

12 ‘‘(A) by substituting ‘$20,000’ for 

13 ‘$5,000’; and 

14 ‘‘(B) by substituting ‘$75,000’ for 

15 ‘$50,000’.’’ 

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

17 this section shall apply to amounts paid or incurred in tax18 able years beginning after the date of the enactment of 

19 this Act. 

20 Subtitle D—Miscellaneous 

21 SEC. 131. GAO TO CERTIFY NO BURDEN ON SMALL BUSI22 NESS CONCERNS. 

23 Clause 3 of Rule XIII of the Rules of the House of 

24 Representatives is amended by adding at the end the fol25 lowing new paragraph: 


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1 ‘‘(i)(1) Each report of a committee on a public bill 

2 or a public joint resolution shall contain a statement by 

3 the Comptroller General that certifies that such bill or res4 olution will not cause an increase in the number of unem5 ployed individuals in the United States. 

6 ‘‘(2) A bill or joint resolution that does not contain 

7 a statement required under subparagraph (1) may not be 

8 considered as passed or agreed to unless so determined 

9 by a vote of not less than three-fifths of the Members vot10 ing, a quorum being present.’’. 

11 SEC. 132. EXEMPTION FROM TAXES IMPOSED AFTER THE 

12 DATE OF ENACTMENT OF THIS ACT. 

13 A small business concern is exempt from any amend14 ment to the Internal Revenue Code of 1986 enacted after 

15 the date of enactment of this Act that would result in any 

16 increase in the amount of Federal taxes due from that 

17 small business concern. 

18 TITLE II—LIMITATION ON 

19 REGULATIONS 

20 SEC. 201. LIMITATION ON REGULATIONS. 

21 (a) IN GENERAL.—The Administrator, acting 

22 through the Chief Counsel of the Office of Advocacy of 

23 the Small Business Administration, is authorized to pro24 vide such support as may be necessary with regard to any 

25 Federal regulation to ensure that a small business concern 


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1 is not required to expend more than a total of 200 man2 hours annually on applications, filings, petitions, or other 

3 paperwork submitted to Federal departments or agencies. 

4 (b) COMMONLY REQUIRED INFORMATION FORM.— 

5 Support provided under subsection (a) shall include the 

6 establishment of a form on the public Internet Web site 

7 of the Administrator, by means of which a small business 

8 concern may provide to the Administrator information 

9 that the Administrator determines to be frequently re10 quired as part of any applications, filings, petitions, or 

11 other paperwork described in subsection (a). The Adminis12 trator shall use information so provided to assist in the 

13 expedited completion of such applications, filings, peti14 tions, or other paperwork. 

15 TITLE III—BUSINESS GROWTH 

16 FOR THE NEXT GENERATION 

17 SEC. 301. POSTPONEMENT OF TERMINATION OF ESTATE 

18 TAX AND GENERATION-SKIPPING TRANSFER 

19 TAXES. 

20 (a) APPLICATION OF EGTRRA SUNSET.—Section 

21 901(a)(2) of title IX of the Economic Growth and Tax 

22 Relief Reconciliation Act of 2001 is amended by striking 

23 ‘‘December 31, 2010’’ and inserting ‘‘December 31, 

24 2015’’. 


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

2 this section shall apply to the estates of decedents dying, 

3 gifts made, or generation-skipping transfers, after Decem4 ber 31, 2010. 

5 TITLE IV—PROTECTING THE 

6 SECRET BALLOT 

7 SEC. 401. FINDINGS. 

8 Congress finds that— 

9 (1) the right of employees under the National 

10 Labor Relations Act to choose whether to be rep11 resented by a labor organization by way of secret 

12 ballot election conducted by the National Labor Re13 lations Board is among the most important protec14 tions afforded under Federal labor law; 

15 (2) the right of employees to choose by secret 

16 ballot is the only method that ensures a choice free 

17 of coercion, intimidation, irregularity, or illegality; 

18 and 

19 (3) the recognition of a labor organization by 

20 using a private agreement, rather than a secret bal21 lot election overseen by the National Labor Relations 

22 Board, threatens the freedom of employees to choose 

23 whether to be represented by a labor organization 

24 and severely limits the ability of the National Labor 

25 Relations Board to ensure the protection of workers. 


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1 SEC. 402. NATIONAL LABOR RELATIONS ACT. 

2 (a) RECOGNITION OF REPRESENTATIVE.— 

3 (1) IN GENERAL.—Section 8(a)(2) of the Na4 tional Labor Relations Act (29 U.S.C. 158(a)(2)) is 

5 amended by inserting before the colon the following: 

6 ‘‘or to recognize or bargain collectively with a labor 

7 organization that has not been selected by a major8 ity of such employees in a secret ballot election con9 ducted by the National Labor Relations Board in ac10 cordance with section 9’’. 

11 (2) APPLICATION.—The amendment made by 

12 subsection (a) shall not apply to collective bar13 gaining relationships in which a labor organization 

14 with majority support was lawfully recognized before 

15 the date of the enactment of this Act. 

16 (b) ELECTION REQUIRED.— 

17 (1) IN GENERAL.—Section 8(b) of the National 

18 Labor Relations Act (29 U.S.C. 158(b)) is amend19 ed— 

20 (A) by striking ‘‘and’’ at the end of para21 graph (6); 

22 (B) by striking the period at the end of 

23 paragraph (7) and inserting ‘‘; and’’; and 

24 (C) by adding at the end the following: 

25 ‘‘(8) to cause or attempt to cause an employer 

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1 ative of a labor organization that has not been se2 lected by a majority of such employees in a secret 

3 ballot election conducted by the National Labor Re4 lations Board in accordance with section 9.’’. 

5 (2) APPLICATION.—The amendment made by 

6 paragraph (1) shall not apply to collective bar7 gaining relationships that were recognized before the 

8 date of the enactment of this Act. 

9 (c) SECRET BALLOT ELECTION.—Section 9(a) of the 

10 National Labor Relations Act (29 U.S.C. 159(a)), is 

11 amended— 

12 (1) by inserting ‘‘(1)’’ after ‘‘(a)’’; 

13 (2) by inserting after ‘‘designated or selected’’ 

14 the following: ‘‘by a secret ballot election conducted 

15 by the National Labor Relations Board in accord16 ance with this section’’; and 

17 (3) by adding at the end the following: 

18 ‘‘(2) The secret ballot election requirement of 

19 paragraph (1) shall not apply to collective bar20 gaining relationships that were recognized before the 

21 date of the enactment of the Small Business Bill of 

22 Rights.’’. 

23 SEC. 403. REGULATIONS. 

24 Not later than 6 months after the date of the enact25 ment of this Act, the National Labor Relations Board 


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1 shall review and revise all regulations promulgated before 

2 such date to implement the amendments made in this Act 

3 to the National Labor Relations Act. 

4 TITLE V—HEALTHCARE: EX5 PANDING CHOICE AND LOW6 ERING COSTS 

7 SEC. 501. FINDINGS AND PURPOSE. 

8 (a) FINDINGS.— 

9 (1) EFFECT ON HEALTH CARE ACCESS AND

10 COSTS.—Congress finds that our current civil justice 

11 system is adversely affecting patient access to health 

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

13 health care, in that the health care liability system 

14 is a costly and ineffective mechanism for resolving 

15 claims of health care liability and compensating in16 jured patients, and is a deterrent to the sharing of 

17 information among health care professionals which 

18 impedes efforts to improve patient safety and quality 

19 of care. 

20 (2) EFFECT ON INTERSTATE COMMERCE.— 

21 Congress finds that the health care and insurance 

22 industries are industries affecting interstate com23 merce and the health care liability litigation systems 

24 existing throughout the United States are activities 

25 that affect interstate commerce by contributing to 


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1 the high costs of health care and premiums for 

2 health care liability insurance purchased by health 

3 care system providers. 

4 (3) EFFECT ON FEDERAL SPENDING.—Con5 gress finds that the health care liability litigation 

6 systems existing throughout the United States have 

7 a significant effect on the amount, distribution, and 

8 use of Federal funds because of— 

9 (A) the large number of individuals who 

10 receive health care benefits under programs op11 erated or financed by the Federal Government; 

12 (B) the large number of individuals who 

13 benefit because of the exclusion from Federal 

14 taxes of the amounts spent to provide them 

15 with health insurance benefits; and 

16 (C) the large number of health care pro17 viders who provide items or services for which 

18 the Federal Government makes payments. 

19 (b) PURPOSE.—It is the purpose of this title to imple20 ment reasonable, comprehensive, and effective health care 

21 liability reforms designed to— 

22 (1) improve the availability of health care serv23 ices in cases in which health care liability actions 

24 have been shown to be a factor in the decreased 

25 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. 502. ENCOURAGING SPEEDY RESOLUTION OF CLAIMS. 

18 The time for the commencement of a health care law19 suit shall be 3 years after the date of manifestation of 

20 injury or 1 year after the claimant discovers, or through 

21 the use of reasonable diligence should have discovered, the 

22 injury, whichever occurs first. In no event shall the time 

23 for commencement of a health care lawsuit exceed 3 years 

24 after the date of manifestation of injury unless tolled for 

25 any of the following— 


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1 (1) upon proof of fraud; 

2 (2) intentional concealment; or 

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

4 therapeutic or diagnostic purpose or effect, in the 

5 person of the injured person. 

6 Actions by a minor shall be commenced within 3 years 

7 from the date of the alleged manifestation of injury except 

8 that actions by a minor under the full age of 6 years shall 

9 be commenced within 3 years of manifestation of injury 

10 or prior to the minor’s 8th birthday, whichever provides 

11 a longer period. Such time limitation shall be tolled for 

12 minors for any period during which a parent or guardian 

13 and a health care provider or health care organization 

14 have committed fraud or collusion in the failure to bring 

15 an action on behalf of the injured minor. 

16 SEC. 503. COMPENSATING PATIENT INJURY. 

17 (a) UNLIMITED AMOUNT OF DAMAGES FOR ACTUAL

18 ECONOMIC LOSSES IN HEALTH CARE LAWSUITS.—In any 

19 health care lawsuit, nothing in this title shall limit a claim20 ant’s recovery of the full amount of the available economic 

21 damages, notwithstanding the limitation in subsection (b). 

22 (b) ADDITIONAL NONECONOMIC DAMAGES.—In any 

23 health care lawsuit, the amount of noneconomic damages, 

24 if available, may be as much as $250,000, regardless of 

25 the number of parties against whom the action is brought 


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1 or the number of separate claims or actions brought with 

2 respect to the same injury. 

3 (c) NO DISCOUNT OF AWARD FOR NONECONOMIC

4 DAMAGES.—For purposes of applying the limitation in 

5 subsection (b), future noneconomic damages shall not be 

6 discounted to present value. The jury shall not be in7 formed about the maximum award for noneconomic dam8 ages. An award for noneconomic damages in excess of 

9 $250,000 shall be reduced either before the entry of judg10 ment, or by amendment of the judgment after entry of 

11 judgment, and such reduction shall be made before ac12 counting for any other reduction in damages required by 

13 law. If separate awards are rendered for past and future 

14 noneconomic damages and the combined awards exceed 

15 $250,000, the future noneconomic damages shall be re16 duced first. 

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

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

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

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

21 damages allocated to such party in direct proportion to 

22 such party’s percentage of responsibility. Whenever a 

23 judgment of liability is rendered as to any party, a sepa24 rate judgment shall be rendered against each such party 

25 for the amount allocated to such party. For purposes of 


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1 this section, the trier of fact shall determine the propor2 tion of responsibility of each party for the claimant’s 

3 harm. 

4 SEC. 504. MAXIMIZING PATIENT RECOVERY. 

5 (a) COURT SUPERVISION OF SHARE OF DAMAGES

6 ACTUALLY PAID TO CLAIMANTS.—In any health care law7 suit, the court shall supervise the arrangements for pay8 ment of damages to protect against conflicts of interest 

9 that may have the effect of reducing the amount of dam10 ages awarded that are actually paid to claimants. In par11 ticular, in any health care lawsuit in which the attorney 

12 for a party claims a financial stake in the outcome by vir13 tue of a contingent fee, the court shall have the power 

14 to restrict the payment of a claimant’s damage recovery 

15 to such attorney, and to redirect such damages to the 

16 claimant based upon the interests of justice and principles 

17 of equity. In no event shall the total of all contingent fees 

18 for representing all claimants in a health care lawsuit ex19 ceed the following limits: 

20 (1) 40 percent of the first $50,000 recovered by 

21 all such claimants. 

(2) 331 22 ⁄3 percent of the next $50,000 recovered 

23 by all such claimants. 

24 (3) 25 percent of the next $500,000 recovered 

25 by all such claimants. 


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1 (4) 15 percent of any amount by which the re2 covery by all such claimants is in excess of 

3 $600,000. 

4 (b) APPLICABILITY.—The limitations in this section 

5 shall apply whether the recovery is by judgment, settle6 ment, mediation, arbitration, or any other form of alter7 native dispute resolution. In a health care lawsuit involv8 ing a minor or incompetent person, a court retains the 

9 authority to authorize or approve a fee that is less than 

10 the maximum permitted under this section. The require11 ment for court supervision in the first two sentences of 

12 subsection (a) applies only in civil actions. 

13 SEC. 505. ADDITIONAL HEALTH BENEFITS. 

14 In any health care lawsuit involving injury or wrong15 ful death, any party may introduce evidence of collateral 

16 source benefits. If a party elects to introduce such evi17 dence, any opposing party may introduce evidence of any 

18 amount paid or contributed or reasonably likely to be paid 

19 or contributed in the future by or on behalf of the oppos20 ing party to secure the right to such collateral source bene21 fits. No provider of collateral source benefits shall recover 

22 any amount against the claimant or receive any lien or 

23 credit against the claimant’s recovery or be equitably or 

24 legally subrogated to the right of the claimant in a health 

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1 tion shall apply to any health care lawsuit that is settled 

2 as well as a health care lawsuit that is resolved by a fact 

3 finder. This section shall not apply to section 1862(b) of 

4 the Social Security Act (42 U.S.C. 1395y(b)) or section 

5 1902(a)(25) of such Act (42 U.S.C. 1396a(a)(25)). 

6 SEC. 506. PUNITIVE DAMAGES. 

7 (a) IN GENERAL.—Punitive damages may, if other8 wise permitted by applicable State or Federal law, be 

9 awarded against any person in a health care lawsuit only 

10 if it is proven by clear and convincing evidence that such 

11 person acted with malicious intent to injure the claimant, 

12 or that such person deliberately failed to avoid unneces13 sary injury that such person knew the claimant was sub14 stantially certain to suffer. In any health care lawsuit for 

15 which no judgment for compensatory damages is rendered 

16 against such person, no punitive damages may be awarded 

17 with respect to the claim in such lawsuit. No demand for 

18 punitive damages shall be included in a health care lawsuit 

19 as initially filed. A court may allow a claimant to file an 

20 amended pleading for punitive damages only upon a mo21 tion by the claimant and after a finding by the court, upon 

22 review of supporting and opposing affidavits or after a 

23 hearing, after weighing the evidence, that the claimant has 

24 established by a substantial probability that the claimant 

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1 quest of any party in a health care lawsuit, the trier of 

2 fact shall consider in a separate proceeding— 

3 (1) whether punitive damages are to be award4 ed and the amount of such award; and 

5 (2) the amount of punitive damages following a 

6 determination of punitive liability. 

7 If a separate proceeding is requested, evidence relevant 

8 only to the claim for punitive damages, as determined by 

9 applicable State law, shall be inadmissible in any pro10 ceeding to determine whether compensatory damages are 

11 to be awarded. 

12 (b) DETERMINING AMOUNT OF PUNITIVE DAM13 AGES.— 

14 (1) FACTORS CONSIDERED.—In determining 

15 the amount of punitive damages, if awarded, in a 

16 health care lawsuit, the trier of fact shall consider 

17 only the following: 

18 (A) The severity of the harm caused by the 

19 conduct of such party. 

20 (B) The duration of the conduct or any 

21 concealment of it by such party. 

22 (C) The profitability of the conduct to such 

23 party. 

24 (D) The number of products sold or med25 ical procedures rendered for compensation, as 


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

2 causing the harm complained of by the claim3 ant. 

4 (E) Any criminal penalties imposed on 

5 such party, as a result of the conduct com6 plained of by the claimant. 

7 (F) The amount of any civil fines assessed 

8 against such party as a result of the conduct 

9 complained of by the claimant. 

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

11 damages, if awarded, in a health care lawsuit may 

12 be as much as $250,000 or as much as two times 

13 the amount of economic damages awarded, which14 ever is greater. The jury shall not be informed of 

15 this limitation. 

16 (c) NO PUNITIVE DAMAGES FOR PRODUCTS THAT

17 COMPLY WITH FDA STANDARDS.— 

18 (1) LIABILITY OF CERTAIN MANUFACTURERS, 

19 DISTRIBUTORS, AND SUPPLIERS.— 

20 (A) IN GENERAL.—No punitive damages 

21 may be awarded against the manufacturer or 

22 distributor of a medical product, or a supplier 

23 of any component or raw material of such med24 ical product, based on a claim that such prod25 uct caused the claimant’s harm where— 


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1 (i)(I) such medical product was sub2 ject to premarket approval, clearance, or li3 censure by the Food and Drug Administra4 tion with respect to the safety of the for5 mulation or performance of the aspect of 

6 such medical product which caused the 

7 claimant’s harm or the adequacy of the 

8 packaging or labeling of such medical 

9 product; and 

10 (II) such medical product was so ap11 proved, cleared, or licensed; or 

12 (ii) such medical product is generally 

13 recognized among qualified experts as safe 

14 and effective pursuant to conditions estab15 lished by the Food and Drug Administra16 tion and applicable Food and Drug Admin17 istration regulations, including without 

18 limitation those related to packaging and 

19 labeling, unless the Food and Drug Admin20 istration has determined that such medical 

21 product was not manufactured or distrib22 uted in substantial compliance with appli23 cable Food and Drug Administration stat24 utes and regulations. 


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1 (B) RULE OF CONSTRUCTION.—Subpara2 graph (A) may not be construed as establishing 

3 the obligation of the Food and Drug Adminis4 tration to demonstrate affirmatively that a 

5 manufacturer, distributor, or supplier referred 

6 to in such subparagraph meets any of the con7 ditions described in such subparagraph. 

8 (2) LIABILITY OF HEALTH CARE PROVIDERS.— 

9 A health care provider who prescribes, or who dis10 penses pursuant to a prescription, a medical product 

11 approved, licensed, or cleared by the Food and Drug 

12 Administration shall not be named as a party to a 

13 product liability lawsuit involving such product and 

14 shall not be liable to a claimant in a class action 

15 lawsuit against the manufacturer, distributor, or 

16 seller of such product. Nothing in this paragraph 

17 prevents a court from consolidating cases involving 

18 health care providers and cases involving products li19 ability claims against the manufacturer, distributor, 

20 or product seller of such medical product. 

21 (3) PACKAGING.—In a health care lawsuit for 

22 harm which is alleged to relate to the adequacy of 

23 the packaging or labeling of a drug which is required 

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1 ices (including labeling regulations related to such 

2 packaging), the manufacturer or product seller of 

3 the drug shall not be held liable for punitive dam4 ages unless such packaging or labeling is found by 

5 the trier of fact by clear and convincing evidence to 

6 be substantially out of compliance with such regula7 tions. 

8 (4) EXCEPTION.—Paragraph (1) shall not 

9 apply with respect to any health care lawsuit in 

10 which— 

11 (A) a person, before or after premarket ap12 proval, clearance, or licensure of such medical 

13 product, knowingly misrepresented to or with14 held from the Food and Drug Administration 

15 information that is required to be submitted 

16 under the Federal Food, Drug, and Cosmetic 

17 Act (21 U.S.C. 301 et seq.) or section 351 of 

18 the Public Health Service Act (42 U.S.C. 262) 

19 that is material and is causally related to the 

20 harm which the claimant allegedly suffered; or 

21 (B) a person made an illegal payment to 

22 an official of the Food and Drug Administra23 tion for the purpose of either securing or main24 taining approval, clearance, or licensure of such 

25 medical product. 


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1 SEC. 507. AUTHORIZATION OF PAYMENT OF FUTURE DAM2 AGES TO CLAIMANTS IN HEALTH CARE LAW3 SUITS. 

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

5 award of future damages, without reduction to present 

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

7 party with sufficient insurance or other assets to fund a 

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

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

10 the future damages be paid by periodic payments. In any 

11 health care lawsuit, the court may be guided by the Uni12 form Periodic Payment of Judgments Act promulgated by 

13 the National Conference of Commissioners on Uniform 

14 State Laws. 

15 (b) APPLICABILITY.—This section applies to all ac16 tions which have not been first set for trial or retrial be17 fore the date of the enactment of this title. 

18 SEC. 508. DEFINITIONS. 

19 In this title: 

20 (1) ALTERNATIVE DISPUTE RESOLUTION SYS21 TEM; ADR.—The term ‘‘alternative dispute resolution 

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

23 for the resolution of health care lawsuits in a man24 ner other than through a civil action brought in a 

25 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, prod13 uct, or other benefit provided or reasonably likely to 

14 be provided in the future to, or on behalf of, the 

15 claimant, as a result of the injury or wrongful death, 

16 pursuant 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. The term ‘‘compensatory 

21 damages’’ includes economic damages and non22 economic damages, as such terms are defined in this 

23 section. 

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

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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 LAWSUIT.—The term 

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

14 claim concerning the provision of health care goods 

15 or services or any medical product affecting inter16 state commerce, or any health care liability action 

17 concerning the provision of health care goods or 

18 services or any medical product affecting interstate 

19 commerce, brought in a State or Federal court or 

20 pursuant to an alternative dispute resolution system, 

21 against a health care provider, a health care organi22 zation, or the manufacturer, distributor, supplier, 

23 marketer, promoter, or seller of a medical product, 

24 regardless of the theory of liability on which the 

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1 tiffs, defendants, or other parties, or the number of 

2 claims or causes of action, in which the claimant al3 leges a health care liability claim. Such term does 

4 not include a claim or action which is based on 

5 criminal liability; which seeks civil fines or penalties 

6 paid to Federal, State, or local government; or which 

7 is grounded in antitrust. 

8 (8) HEALTH CARE LIABILITY ACTION.—The 

9 term ‘‘health care liability action’’ means a civil ac10 tion brought in a State or Federal court or pursuant 

11 to an alternative dispute resolution system, against 

12 a health care provider, a health care organization, or 

13 the manufacturer, distributor, supplier, marketer, 

14 promoter, or seller of a medical product, regardless 

15 of the theory of liability on which the claim is based, 

16 or the number of plaintiffs, defendants, or other par17 ties, or the number of causes of action, in which the 

18 claimant alleges a health care liability claim. 

19 (9) HEALTH CARE LIABILITY CLAIM.—The 

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

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

22 against a health care provider, health care organiza23 tion, or the manufacturer, distributor, supplier, mar24 keter, promoter, or seller of a medical product, in25 cluding, but not limited to, third-party claims, crossVerDate Nov 24 2008 01:35 Apr 23, 2010 Jkt 089200 PO 00000 Frm 00030 Fmt 6652 Sfmt 6201 E:\BILLS\H5109.IH H5109

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1 claims, counter-claims, or contribution claims, which 

2 are based upon the provision of, use of, or payment 

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

4 care services or medical products, regardless of the 

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

6 number of plaintiffs, defendants, or other parties, or 

7 the number of causes of action. 

8 (10) HEALTH CARE ORGANIZATION.—The term 

9 ‘‘health care organization’’ means any person or en10 tity which is obligated to provide or pay for health 

11 benefits under any health plan, including any person 

12 or entity acting under a contract or arrangement 

13 with a health care organization to provide or admin14 ister any health benefit. 

15 (11) HEALTH CARE PROVIDER.—The term 

16 ‘‘health care provider’’ means any person or entity 

17 required by State or Federal laws or regulations to 

18 be licensed, registered, or certified to provide health 

19 care services, and being either so licensed, reg20 istered, or certified, or exempted from such require21 ment by other statute or regulation. 

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

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

24 goods or services provided by a health care organiza25 tion, provider, or by any individual working under 


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1 the supervision of a health care provider, that relates 

2 to the diagnosis, prevention, or treatment of any 

3 human disease or impairment, or the assessment or 

4 care of the health of human beings. 

5 (13) MALICIOUS INTENT TO INJURE.—The 

6 term ‘‘malicious intent to injure’’ means inten7 tionally causing or attempting to cause physical in8 jury other than providing health care goods or serv9 ices. 

10 (14) MEDICAL PRODUCT.—The term ‘‘medical 

11 product’’ means a drug, device, or biological product 

12 intended for humans, and the terms ‘‘drug’’, ‘‘de13 vice’’, and ‘‘biological product’’ have the meanings 

14 given such terms in sections 201(g)(1) and 201(h) 

15 of the Federal Food, Drug and Cosmetic Act (21 

16 U.S.C. 321(g)(1) and (h)) and section 351(a) of the 

17 Public Health Service Act (42 U.S.C. 262(a)), re18 spectively, including any component or raw material 

19 used therein, but excluding health care services. 

20 (15) NONECONOMIC DAMAGES.—The term 

21 ‘‘noneconomic damages’’ means damages for phys22 ical and emotional pain, suffering, inconvenience, 

23 physical impairment, mental anguish, disfigurement, 

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1 mestic service), hedonic damages, injury to reputa2 tion, and all other nonpecuniary losses of any kind 

3 or nature. 

4 (16) PUNITIVE DAMAGES.—The term ‘‘punitive 

5 damages’’ means damages awarded, for the purpose 

6 of punishment or deterrence, and not solely for com7 pensatory purposes, against a health care provider, 

8 health care organization, or a manufacturer, dis9 tributor, or supplier of a medical product. Punitive 

10 damages are neither economic nor noneconomic 

11 damages. 

12 (17) RECOVERY.—The term ‘‘recovery’’ means 

13 the net sum recovered after deducting any disburse14 ments or costs incurred in connection with prosecu15 tion or settlement of the claim, including all costs 

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

17 incurred by the plaintiff and the attorneys’ office 

18 overhead costs or charges for legal services are not 

19 deductible disbursements or costs for such purpose. 

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

21 the several States, the District of Columbia, the 

22 Commonwealth of Puerto Rico, the United States 

23 Virgin Islands, Guam, American Samoa, the Com24 monwealth of the Northern Mariana Islands, the 

25 Trust Territory of the Pacific Islands, and any other 


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1 territory or possession of the United States, or any 

2 political subdivision thereof. 

3 SEC. 509. EFFECT ON OTHER LAWS. 

4 (a) VACCINE INJURY.— 

5 (1) To the extent that title XXI of the Public 

6 Health Service Act establishes a Federal rule of law 

7 applicable to a civil action brought for a vaccine-re8 lated injury or death— 

9 (A) title V of this Act does not affect the 

10 application of the rule of law applicable to such 

11 an action; and 

12 (B) any rule of law prescribed by title V of 

13 this Act in conflict with a rule of law of such 

14 title XXI shall not apply to such action. 

15 (2) If there is an aspect of a civil action 

16 brought for a vaccine-related injury or death to 

17 which a Federal rule of law under title XXI of the 

18 Public Health Service Act does not apply, then title 

19 V of this Act or otherwise applicable law (as deter20 mined under this title) will apply to such aspect of 

21 such action. 

22 (b) OTHER FEDERAL LAW.—Except as provided in 

23 this section, nothing in this title shall be deemed to affect 

24 any defense available to a defendant in a health care law25 suit or action under any other provision of Federal law. 


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1 SEC. 510. STATE FLEXIBILITY AND PROTECTION OF 

2 STATES’ RIGHTS. 

3 (a) HEALTH CARE LAWSUITS.—The provisions gov4 erning health care lawsuits set forth in this title preempt, 

5 subject to subsections (b) and (c), State law to the extent 

6 that State law prevents the application of any provisions 

7 of law established by or under this title. The provisions 

8 governing health care lawsuits set forth in this title super9 sede chapter 171 of title 28, United States Code, to the 

10 extent that such chapter— 

11 (1) provides for a greater amount of damages 

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

13 care lawsuit may be commenced, or a reduced appli14 cability or scope of periodic payment of future dam15 ages, than provided in title V of this Act; or 

16 (2) prohibits the introduction of evidence re17 garding collateral source benefits, or mandates or 

18 permits subrogation or a lien on collateral source 

19 benefits. 

20 (b) PROTECTION OF STATES’ RIGHTS AND OTHER

21 LAWS.— 

22 (1) IN GENERAL.—Any issue that is not gov23 erned by any provision of law established by or 

24 under this title (including State standards of neg25 ligence) shall be governed by otherwise applicable 

26 State or Federal law. 


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1 (2) LAWS THAT PROVIDE GREATER PROTEC2 TIONS.—This title shall not preempt or supersede 

3 any State or Federal law that imposes greater proce4 dural or substantive protections for health care pro5 viders and health care organizations from liability, 

6 loss, or damages than those provided by this title or 

7 create a cause of action. 

8 (c) STATE FLEXIBILITY.—No provision of this title 

9 shall be construed to preempt— 

10 (1) any State law (whether effective before, on, 

11 or after the date of the enactment of this title) that 

12 specifies a particular monetary amount of compen13 satory or punitive damages (or the total amount of 

14 damages) that may be awarded in a health care law15 suit, regardless of whether such monetary amount is 

16 greater or lesser than is provided for under this title, 

17 notwithstanding section 503(a); or 

18 (2) any defense available to a party in a health 

19 care lawsuit under any other provision of State or 

20 Federal law. 

21 SEC. 511. APPLICABILITY; EFFECTIVE DATE. 

22 This title shall apply to any health care lawsuit 

23 brought in a Federal or State court, or subject to an alter24 native dispute resolution system, that is initiated on or 

25 after the date of the enactment of this title, except that 


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1 any health care lawsuit arising from an injury occurring 

2 prior to the date of the enactment of this title shall be 

3 governed by the applicable statute of limitations provisions 

4 in effect at the time the injury occurred. 

5 SEC. 512. SENSE OF CONGRESS. 

6 It is the sense of Congress that a health insurer 

7 should be liable for damages for harm caused when it 

8 makes a decision as to what care is medically necessary 

9 and appropriate. 

10 SEC. 513. COOPERATIVE GOVERNING OF INDIVIDUAL 

11 HEALTH INSURANCE COVERAGE. 

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

13 Service Act (42 U.S.C. 300gg et seq.) is amended by add14 ing at the end the following new part: 

15 ‘‘PART D—COOPERATIVE GOVERNING OF 

16 INDIVIDUAL HEALTH INSURANCE COVERAGE 

17 ‘‘SEC. 2795. DEFINITIONS. 

18 ‘‘In this part: 

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

20 State’ means, with respect to individual health insur21 ance coverage offered by a health insurance issuer, 

22 the State designated by the issuer as the State 

23 whose covered laws shall govern the health insurance 

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

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


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1 only designate one such State as its primary State 

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

3 issuer may not change the designated primary State 

4 with respect to individual health insurance coverage 

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

6 may be made upon renewal of the policy. With re7 spect to such designated State, the issuer is deemed 

8 to be doing business in that State. 

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

10 State’ means, with respect to individual health insur11 ance coverage offered by a health insurance issuer, 

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

13 of a health insurance issuer that is selling a policy 

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

15 is deemed to be doing business in that secondary 

16 State. 

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

18 ‘health insurance issuer’ has the meaning given such 

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

20 issuer must be licensed in the primary State and be 

21 qualified to sell individual health insurance coverage 

22 in that State. 

23 ‘‘(4) INDIVIDUAL HEALTH INSURANCE COV24 ERAGE.—The term ‘individual health insurance cov25 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, the 

5 Commonwealth of Puerto Rico, the United States 

6 Virgin Islands, Guam, American Samoa, and the 

7 Commonwealth of the Northern Mariana Islands. 

8 ‘‘(9) UNFAIR CLAIMS SETTLEMENT PRAC9 TICES.—The term ‘unfair claims settlement prac10 tices’ means only the following practices: 

11 ‘‘(A) Knowingly misrepresenting to claim12 ants and insured individuals relevant facts or 

13 policy provisions relating to coverage at issue. 

14 ‘‘(B) Failing to acknowledge with reason15 able promptness pertinent communications with 

16 respect to claims arising under policies. 

17 ‘‘(C) Failing to adopt and implement rea18 sonable standards for the prompt investigation 

19 and settlement of claims arising under policies. 

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

21 and equitable settlement of claims submitted in 

22 which liability has become reasonably clear. 

23 ‘‘(E) Refusing to pay claims without con24 ducting a reasonable investigation. 


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

2 claims within a reasonable period of time after 

3 having completed an investigation related to 

4 those claims. 

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

6 insured individuals or their beneficiaries to in7 stitute suits to recover amounts due under its 

8 policies by offering substantially less than the 

9 amounts ultimately recovered in suits brought 

10 by them. 

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

12 to settle or settling claims for less than the 

13 amount that a reasonable person would believe 

14 the insured individual or his or her beneficiary 

15 was entitled by reference to written or printed 

16 advertising material accompanying or made 

17 part of an application. 

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

19 on the basis of an application that was materi20 ally altered without notice to, or knowledge or 

21 consent of, the insured. 

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

23 present claims within 15 calendar days of a re24 quest with reasonable explanations regarding 

25 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 ‘‘ ‘Notice’ 

5 ‘‘ ‘This policy is issued by XXXXX and is gov6 erned by the laws and regulations of the State of 

7 XXXXX, and it has met all the laws of that State 

8 as determined by that State’s Department of Insur9 ance. This policy may be less expensive than others 

10 because it is not subject to all of the insurance laws 

11 and regulations of the State of XXXXX, including 

12 coverage of some services or benefits mandated by 

13 the law of the State of XXXXX. Additionally, this 

14 policy is not subject to all of the consumer protec15 tion laws or restrictions on rate changes of the State 

16 of XXXXX. As with all insurance products, before 

17 purchasing this policy, you should carefully review 

18 the policy and determine what health care services 

19 the policy covers and what benefits it provides, in20 cluding any exclusions, limitations, or conditions for 

21 such services or benefits.’. 

22 ‘‘(d) PROHIBITION ON CERTAIN RECLASSIFICATIONS

23 AND PREMIUM INCREASES.— 

24 ‘‘(1) IN GENERAL.—For purposes of this sec25 tion, a health insurance issuer that provides indiVerDate Nov 24 2008 01:35 Apr 23, 2010 Jkt 089200 PO 00000 Frm 00049 Fmt 6652 Sfmt 6201 E:\BILLS\H5109.IH H5109

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1 vidual health insurance coverage to an individual 

2 under this part in a primary or secondary State may 

3 not upon renewal— 

4 ‘‘(A) move or reclassify the individual in5 sured under the health insurance coverage from 

6 the class such individual is in at the time of 

7 issue of the contract based on the health-status8 related factors of the individual; or 

9 ‘‘(B) increase the premiums assessed the 

10 individual for such coverage based on a health11 status-related factor or change of a health-sta12 tus-related factor or the past or prospective 

13 claim experience of the insured individual. 

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

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

16 issuer— 

17 ‘‘(A) from terminating or discontinuing 

18 coverage or a class of coverage in accordance 

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

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

21 policyholders within a class based on claims ex22 perience; 

23 ‘‘(C) from changing premiums or offering 

24 discounted premiums to individuals who engage 

25 in wellness activities at intervals prescribed by 


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1 the issuer, if such premium changes or incen2 tives— 

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

4 the insurance contract; 

5 ‘‘(ii) are based on specific wellness ac6 tivities that are not applicable to all indi7 viduals; and 

8 ‘‘(iii) are not obtainable by all individ9 uals to whom coverage is offered; 

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

11 ‘‘(E) from retroactively adjusting the rates 

12 charged an insured individual if the initial rates 

13 were set based on material misrepresentation by 

14 the individual at the time of issue. 

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

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

17 individual health insurance coverage in a secondary State 

18 unless that coverage is currently offered for sale in the 

19 primary State. 

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

21 HEALTH INSURANCE ISSUERS.—Any State may require 

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

23 broker for a health insurance issuer with respect to the 

24 offering of individual health insurance coverage obtain a 

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1 pensation subject to the provisions of the laws of that 

2 State, except that a State may not impose any qualifica3 tion or requirement which discriminates against a non4 resident agent or broker. 

5 ‘‘(g) DOCUMENTS FOR SUBMISSION TO STATE IN6 SURANCE COMMISSIONER.—Each health insurance issuer 

7 issuing individual health insurance coverage in both pri8 mary and secondary States shall submit— 

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

10 State in which it intends to offer such coverage, be11 fore it may offer individual health insurance cov12 erage in such State— 

13 ‘‘(A) a copy of the plan of operation or fea14 sibility study or any similar statement of the 

15 policy being offered and its coverage (which 

16 shall include the name of its primary State and 

17 its principal place of business); 

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

19 designation of its primary State; and 

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

21 issuer’s compliance with all the laws of the pri22 mary State; and 

23 ‘‘(2) to the insurance commissioner of each sec24 ondary State in which it offers individual health in25 surance coverage, a copy of the issuer’s quarterly fiVerDate Nov 24 2008 01:35 Apr 23, 2010 Jkt 089200 PO 00000 Frm 00052 Fmt 6652 Sfmt 6201 E:\BILLS\H5109.IH H5109

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1 nancial statement submitted to the primary State, 

2 which statement shall be certified by an independent 

3 public accountant and contain a statement of opin4 ion on loss and loss adjustment expense reserves 

5 made by— 

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

7 of Actuaries; or 

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

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

10 Nothing in this section shall be construed to affect the 

11 authority of any Federal or State court to enjoin— 

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

13 insurance coverage by a health insurance issuer to 

14 any person or group who is not eligible for such in15 surance; or 

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

17 insurance coverage that violates the requirements of 

18 the law of a secondary State which are described in 

19 subparagraphs (A) through (H) of section 

20 2796(b)(1). 

21 ‘‘(i) POWER OF SECONDARY STATES TO TAKE AD22 MINISTRATIVE ACTION.—Nothing in this section shall be 

23 construed to affect the authority of any State to enjoin 

24 conduct in violation of that State’s laws described in sec25 tion 2796(b)(1). 


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

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

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

4 paragraph (2), nothing in this section shall be con5 strued to affect the authority of any State to make 

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

7 State with respect to which a health insurance issuer 

8 is not exempt under subsection (b). 

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

10 If a State seeks an injunction regarding the conduct 

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

12 (h), such injunction must be obtained from a Fed13 eral or State court of competent jurisdiction. 

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

15 section shall affect the authority of any State to bring ac16 tion in any Federal or State court. 

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

18 this section shall be construed to affect the applicability 

19 of State laws generally applicable to persons or corpora20 tions. 

21 ‘‘(m) GUARANTEED AVAILABILITY OF COVERAGE TO

22 HIPAA-ELIGIBLE INDIVIDUALS.—To the extent that a 

23 health insurance issuer is offering coverage in a primary 

24 State that does not accommodate residents of secondary 

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1 dents of a secondary State, and the issuer is offering cov2 erage under this part in such secondary State which has 

3 not adopted a qualified high-risk pool as its acceptable al4 ternative mechanism (as defined in section 2744(c)(2)), 

5 the issuer shall, with respect to any individual health in6 surance coverage offered in a secondary State under this 

7 part, comply with the guaranteed availability requirements 

8 for eligible individuals in section 2741. 

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

10 BEFORE ISSUER MAY SELL INTO SECONDARY 

11 STATES. 

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

13 issue individual health insurance coverage in a secondary 

14 State if the State insurance commissioner does not use 

15 a risk-based capital formula for the determination of cap16 ital and surplus requirements for all health insurance 

17 issuers. 

18 ‘‘SEC. 2798. INDEPENDENT EXTERNAL APPEALS PROCE19 DURES. 

20 ‘‘(a) RIGHT TO EXTERNAL APPEAL.—A health insur21 ance issuer may not offer, sell, or issue individual health 

22 insurance coverage in a secondary State under the provi23 sions of this title unless— 

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

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1 lishing an independent review process for individuals 

2 who are covered by individual health insurance cov3 erage, or 

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

5 subparagraph (A) are not met with respect to the ei6 ther of such States, the issuer provides an inde7 pendent review mechanism substantially identical (as 

8 determined by the applicable State authority of such 

9 State) to that prescribed in the ‘Health Carrier Ex10 ternal Review Model Act’ of the National Association 

11 of Insurance Commissioners for all individuals who 

12 purchase insurance coverage under the terms of this 

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

14 is conducted by an independent medical reviewer, or 

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

16 requirements of subsection (b) are met. 

17 ‘‘(b) QUALIFICATIONS OF INDEPENDENT MEDICAL

18 REVIEWERS.—In the case of any independent review 

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

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

21 claim to an independent medical reviewer, or to any 

22 panel of such reviewers, to conduct independent 

23 medical review, the issuer shall ensure that— 


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1 ‘‘(A) each independent medical reviewer 

2 meets the qualifications described in paragraphs 

3 (2) and (3); 

4 ‘‘(B) with respect to each review, each re5 viewer meets the requirements of paragraph (4) 

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

7 panel, meets the requirements described in 

8 paragraph (5); and 

9 ‘‘(C) compensation provided by the issuer 

10 to each reviewer is consistent with paragraph 

11 (6). 

12 ‘‘(2) LICENSURE AND EXPERTISE.—Each inde13 pendent medical reviewer shall be a physician 

14 (allopathic or osteopathic) or health care profes15 sional who— 

16 ‘‘(A) is appropriately credentialed or li17 censed in 1 or more States to deliver health 

18 care services; and 

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

20 the diagnosis, or provides the type of treatment 

21 under review. 

22 ‘‘(3) INDEPENDENCE.— 

23 ‘‘(A) IN GENERAL.—Subject to subpara24 graph (B), each independent medical reviewer 

25 in a case shall— 


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

2 in paragraph (7)); 

3 ‘‘(ii) not have a material familial, fi4 nancial, or professional relationship with 

5 such a party; and 

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

7 interest with such a party (as determined 

8 under regulations). 

9 ‘‘(B) EXCEPTION.—Nothing in subpara10 graph (A) shall be construed to— 

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

12 the basis of affiliation with the issuer, 

13 from serving as an independent medical re14 viewer if— 

15 ‘‘(I) a nonaffiliated individual is 

16 not reasonably available; 

17 ‘‘(II) the affiliated individual is 

18 not involved in the provision of items 

19 or services in the case under review; 

20 ‘‘(III) the fact of such an affili21 ation is disclosed to the issuer and the 

22 enrollee (or authorized representative) 

23 and neither party objects; and 

24 ‘‘(IV) the affiliated individual is 

25 not an employee of the issuer and 


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1 does not provide services exclusively or 

2 primarily to or on behalf of the issuer; 

3 ‘‘(ii) prohibit an individual who has 

4 staff privileges at the institution where the 

5 treatment involved takes place from serv6 ing as an independent medical reviewer 

7 merely on the basis of such affiliation if 

8 the affiliation is disclosed to the issuer and 

9 the enrollee (or authorized representative), 

10 and neither party objects; or 

11 ‘‘(iii) prohibit receipt of compensation 

12 by an independent medical reviewer from 

13 an entity if the compensation is provided 

14 consistent with paragraph (6). 

15 ‘‘(4) PRACTICING HEALTH CARE PROFESSIONAL

16 IN SAME FIELD.— 

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

18 treatment, or the provision of items or serv19 ices— 

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

21 a practicing physician (allopathic or osteo22 pathic) of the same or similar specialty, as 

23 a physician who, acting within the appro24 priate scope of practice within the State in 

25 which the service is provided or rendered, 


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1 typically treats the condition, makes the 

2 diagnosis, or provides the type of treat3 ment under review; or 

4 ‘‘(ii) by a nonphysician health care 

5 professional, the reviewer, or at least 1 

6 member of the review panel, shall be a 

7 practicing nonphysician health care profes8 sional of the same or similar specialty as 

9 the nonphysician health care professional 

10 who, acting within the appropriate scope of 

11 practice within the State in which the serv12 ice is provided or rendered, typically treats 

13 the condition, makes the diagnosis, or pro14 vides the type of treatment 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 under23 insured; 


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

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. 514. SECA TAX DEDUCTION FOR HEALTH INSURANCE 

18 COSTS. 

19 (a) IN GENERAL.—Subsection (l) of section 162 of 

20 the Internal Revenue Code of 1986 (relating to special 

21 rules for health insurance costs of self-employed individ22 uals) is amended by striking paragraph (4) and by redes23 ignating paragraph (5) as paragraph (4). 


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

2 this section shall apply to taxable years beginning after 

3 the date of the enactment of this title. 

4 TITLE VI—WORKFORCE 

5 INTEGRITY 

6 SEC. 601. E-VERIFY PROGRAM MADE PERMANENT. 

7 Section 401(b) of the Illegal Immigration Reform and 

8 Immigrant Responsibility Act of 1996 (division C of Pub9 lic Law 104–208; 8 U.S.C. 1324a note) is amended— 

10 (1) in the subsection heading, by striking ‘‘; 

11 TERMINATION’’; and 

12 (2) by striking the second sentence. 

13 SEC. 602. VERIFICATION UNDER E-VERIFY PROGRAM MADE 

14 POSSIBLE OVER TELEPHONE. 

15 Section 404(d) of such Act is amended— 

16 (1) in paragraph (3), by striking the ‘‘and’’ at 

17 the end; 

18 (2) in paragraph (4)(C), by striking period at 

19 the end and inserting ‘‘; and’’; and 

20 (3) by adding at the end the following: 

21 ‘‘(5) in such a manner that the confirmation or 

22 noncomfirmation may be provided by telephone.’’. 

23 SEC. 603. GRACE PERIOD TO CORRECT PAPERWORK. 

24 Any small business concern that violates any provi25 sion of the Immigration and Nationality Act relating to 


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1 the filing of an application, petition, or other paperwork, 

2 resulting in the assessment of a fine or penalty shall not 

3 be subject to that fine or other penalty if that small busi4 ness concern remedies that violation during the 30-day pe5 riod beginning on the date on which notice of the violation 

6 is received by the small business concern. 

7 TITLE VII—INTELLECTUAL 

8 PROPERTY PROTECTION 

9 SEC. 701. LIMITS ON PATENT LEGISLATION. 

10 It is the sense of Congress that the Congress should 

11 make no law to lessen the protections available for new 

12 products or processes under the patent laws of the United 

13 States or to reduce the term of any existing patent. 

14 SEC. 702. EXPEDITED PATENT FILING PROCEDURES FOR 

15 SMALL BUSINESS CONCERNS. 

16 There is established in the United States Patent and 

17 Trademark Office a Patent Ombudsman Program, which 

18 shall consist of the Patent Ombudsman Pilot Program an19 nounced by the United States Patent and Trademark Of20 fice on October 27, 2009, to be headed by an Ombudsman 

21 appointed by the Director of the United States Patent and 

22 Trademark Office. The duties of the Ombudsman shall in23 clude providing support and services relating to patent fil24 ings to small business concerns. 


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1 TITLE VIII—INCENTIVES FOR 

2 ENERGY EFFICIENCY 

3 Subtitle A—Vehicles 

4 SEC. 801. CONSUMER INCENTIVES TO PURCHASE AD5 VANCED TECHNOLOGY VEHICLES. 

6 (a) NEW QUALIFIED HYBRID MOTOR VEHICLES.— 

7 (1) EXTENSION OF ALTERNATIVE VEHICLE

8 CREDIT.—Subsection (j) of section 30B of the Inter9 nal Revenue Code of 1986, as amended by sub10 section (b), is amended by striking paragraph (3). 

11 (2) INCREASE IN CREDIT AMOUNT.—Subpara12 graph (A) of section 30B(d)(2) of such Code is 

13 amended by striking ‘‘the sum of’’ and inserting 

14 ‘‘150 percent of the sum of’’. 

15 (b) ELIMINATION ON NUMBER OF NEW QUALIFIED

16 HYBRID AND ADVANCED LEAN BURN TECHNOLOGY VE17 HICLES ELIGIBLE FOR ALTERNATIVE MOTOR VEHICLE

18 CREDIT.— 

19 (1) IN GENERAL.—Section 30B of the Internal 

20 Revenue Code of 1986 is amended by striking sub21 section (f) and by redesignating subsections (g) 

22 through (k) as subsections (f) through (j), respec23 tively. 

24 (2) CONFORMING AMENDMENTS.— 


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1 (A) Paragraphs (4) and (6) of section 

2 30B(h) of the Internal Revenue Code of 1986 

3 are each amended by striking ‘‘(determined 

4 without regard to subsection (g))’’ and inserting 

5 ‘‘determined without regard to subsection (f))’’. 

6 (B) Section 38(b)(25) of such Code is 

7 amended by striking ‘‘section 30B(g)(1)’’ and 

8 inserting ‘‘section 30B(f)(1)’’. 

9 (C) Section 55(c)(2) of such Code is 

10 amended by striking ‘‘section 30B(g)(2)’’ and 

11 inserting ‘‘section 30B(f)(2)’’. 

12 (D) Section 1016(a)(36) of such Code is 

13 amended by striking ‘‘section 30B(h)(4)’’ and 

14 inserting ‘‘section 30B(g)(4)’’. 

15 (E) Section 6501(m) of such Code is 

16 amended by striking ‘‘section 30B(h)(9)’’ and 

17 inserting ‘‘section 30B(g)(9)’’. 

18 (c) FLEXIBLE FUEL VEHICLE CREDIT.— 

19 (1) IN GENERAL.—Subpart B of part IV of 

20 subchapter A of chapter 1 of the Internal Revenue 

21 Code of 1986 (relating to foreign tax credit, etc.) is 

22 amended by adding at the end the following new sec23 tion: 


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1 ‘‘SEC. 30E. FLEXIBLE FUEL VEHICLE CREDIT. 

2 ‘‘(a) ALLOWANCE OF CREDIT.—There shall be al3 lowed as a credit against the tax imposed by this chapter 

4 for the taxable year an amount equal to the GEM flexible 

5 fuel vehicle credit. 

6 ‘‘(b) GEM FLEXIBLE FUEL VEHICLE CREDIT.— 

7 ‘‘(1) IN GENERAL.—For the purposes of sub8 section (a), the GEM flexible fuel vehicle credit de9 termined under this subsection for the taxable year 

10 is the credit amount determined under paragraph 

11 (2) with respect to a GEM flexible fuel vehicle 

12 placed in service by the taxpayer during the taxable 

13 year. 

14 ‘‘(2) CREDIT AMOUNT.—In the case of a new 

15 qualified GEM flexible fuel vehicle which is a pas16 senger automobile or light truck and which has a 

17 gross vehicle weight rating of not more than 8,500 

18 pounds, the amount shall be $1,000. 

19 ‘‘(c) DEFINITIONS.—For purposes of this section: 

20 ‘‘(1) GEM FLEXIBLE FUEL VEHICLE.—The 

21 term ‘GEM flexible fuel vehicle’ means a motor vehi22 cle warrantied by its manufacturer to operate on any 

23 combination of gasoline, E85, M85, biodiesel, and 

24 hydrogen and its blends. 


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1 ‘‘(2) E85.—The term ‘E85’ means a fuel blend 

2 containing 85 percent ethanol and 15 percent gaso3 line by volume. 

4 ‘‘(3) M85.—The term ‘M85’ means a fuel blend 

5 containing 85 percent methanol and 15 percent gas6 oline by volume.’’. 

7 (2) CLERICAL AMENDMENT.—The table of sec8 tions for subpart B of part IV of subchapter A of 

9 chapter 1 of the Internal Revenue Code of 1986 (re10 lating to foreign tax credit, etc.), is amended by add11 ing at the end the following new item: 

‘‘Sec. 30E. Flexible fuel vehicle credit.’’. 

12 (d) EFFECTIVE DATE.—The amendments made by 

13 this section shall apply to property placed in service after 

14 December 31, 2009, in taxable years ending after such 

15 date. 

16 Subtitle B—Extensions 

17 SEC. 811. MAKE PERMANENT THE TAX CREDIT FOR RESI18 DENTIAL ENERGY-EFFICIENT PROPERTY. 

19 Section 25D is amended by striking subsection (g). 

20 SEC. 812. MAKE PERMANENT THE ENERGY EFFICIENCY 

21 CREDIT FOR EXISTING HOMES. 

22 Section 25C is amended by striking subsection (g). 

23 SEC. 813. MAKE PERMANENT THE ENERGY EFFICIENCY 

24 COMMERCIAL BUILDINGS DEDUCTION. 

25 Section 179D is amended by striking subsection (h). 


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1 TITLE IX—GUIDANCE ABOUT 

2 NEW RULES 

3 SEC. 901. GUIDANCE AND ADVICE ABOUT NEW RULES. 

4 (a) DETERMINATION REGARDING IMPACT OF NEW

5 RULES.—The head of each department or agency of the 

6 Federal Government may not issue a rule until that head 

7 has conducted a study to determine whether the rule will 

8 have an unduly burdensome effect on small business con9 cerns. If that head determines that such an effect would 

10 occur, the head shall submit to the Administrator, not 

11 later than the date that is 3 months after the date that 

12 determination is made, guidance on how that effect may 

13 be mitigated. 

14 (b) ADVICE.—The Administrator shall, on request, 

15 provide such other advice to small business concerns about 

16 those matters as the Administrator determines appro17 priate. 

18 (c) PUBLICATION.—The Administrator shall publish 

19 and maintain all guidance received under subsection (a) 

20 and all advice provided under subsection (b) on the public 

21 Internet Web site of the Administrator, in a manner that 

22 ensures the continuing availability of that guidance to 

23 small business concerns. 


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1 TITLE X—SMALL BUSINESS 

2 PROVISIONS 

3 Subtitle A—Small Business General 

4 Provisions 

5 SEC. 1001. ADMINISTRATION PROHIBITED FROM CAPPING 

6 EXECUTIVE COMPENSATION. 

7 In carrying out any program under the Small Busi8 ness Act or the Small Business Investment Act of 1958, 

9 the Administrator may not impose any limit on executive 

10 compensation by any small business concern. 

11 SEC. 1002. REDUCTION OF REGULATORY BURDEN. 

12 (a) GAO REPORT.—The Comptroller General of the 

13 United States shall conduct a study of each regulation of 

14 each Federal agency or department to determine the bur15 den that such regulation imposes on small business con16 cerns. The Comptroller General shall submit a report con17 taining information on such burden to the Administrator 

18 not later than the date that is 9 months after the date 

19 of enactment of this Act. 

20 (b) SBA RECOMMENDATIONS.—Not later than 6 

21 months after receiving the report under subsection (a), the 

22 Administrator shall publish and maintain on the public 

23 Internet Web site of the Administrator recommendations 

24 on how to reduce the burden imposed by such regulation 

25 on small business concerns. 


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1 (c) REDUCTION OF PAPERWORK.—In carrying out 

2 any program under the Small Business Act or the Small 

3 Business Investment Act of 1958, the Administrator, act4 ing through the Chief Counsel of the Office of Advocacy 

5 in the Small Business Administration, shall take any ac6 tions the Administrator determines appropriate to reduce 

7 the amount of paperwork (including any application, fil8 ing, or petition) that a small business concern may be re9 quired to complete by any Federal department or agency. 

10 Such steps shall include providing for the replacement of 

11 such paperwork with electronic or telephone filing or re12 porting. 

13 SEC. 1003. LITIGATION BURDEN ON SMALL BUSINESS CON14 CERNS TO BE LIMITED TO CURRENT LEVELS. 

15 It is the sense of the Congress that the Congress 

16 should not pass legislation altering substantive or proce17 dural law that causes more small business concerns to be 

18 involved in litigation. 

19 SEC. 1004. EXPANSION OF VOLUNTEER REPRESENTATION 

20 AND BENCHMARK REPORTS. 

21 (a) EXPANSION OF VOLUNTEER REPRESENTA22 TION.—Section 8(b)(1)(B) of the Small Business Act (15 

23 U.S.C. 637(b)(1)(B)) is amended— 

24 (1) by inserting ‘‘(i)’’ after ‘‘(B)’’; and 

25 (2) by adding at the end the following: 


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1 ‘‘(ii) The Administrator shall ensure that 

2 SCORE, established under this subparagraph, 

3 carries out a plan to increase the number of 

4 mentors and, on an annual basis, reports to the 

5 Administrator on the implementation of this 

6 subparagraph.’’. 

7 (b) BENCHMARK REPORTS.—Section 8(b)(1)(B) of 

8 the Small Business Act (15 U.S.C. 637(b)(1)(B)), as 

9 amended by this Act, is further amended by adding at the 

10 end the following: 

11 ‘‘(iii) The Administrator shall ensure that 

12 SCORE, established under this subparagraph, 

13 establishes benchmarks for use in evaluating 

14 the performance of its activities and of its vol15 unteers. The benchmarks shall include bench16 marks related to the hours spent mentoring by 

17 volunteers and benchmarks relating to the per18 formance of the persons assisted by SCORE. 

19 SCORE shall report, on an annual basis, to the 

20 Administrator the extent to which the bench21 marks established under this clause are being 

22 attained.’’. 


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1 SEC. 1005. MENTORING AND NETWORKING. 

2 Section 8(b)(1)(B) of the Small Business Act (15 

3 U.S.C. 637(b)(1)(B)), as amended by this Act, is further 

4 amended by adding at the end the following: 

5 ‘‘(iv) The Administrator shall ensure that 

6 SCORE, established under this subparagraph, 

7 establishes a mentoring program for small busi8 ness concerns that provides one-on-one advice 

9 to small business concerns from qualified coun10 selors. For purposes of this clause, qualified 

11 counselors are counselors with at least 10 years 

12 experience in the industry sector or area of re13 sponsibility of the small business concern seek14 ing advice. 

15 ‘‘(v) The Administrator shall carry out a 

16 networking program through SCORE, estab17 lished under this subparagraph, that provides 

18 small business concerns with the opportunity to 

19 make business contacts in their industry or geo20 graphic region.’’. 

21 SEC. 1006. NAME OF PROGRAM CHANGED TO SCORE. 

22 (a) NAME CHANGE.—The Small Business Act is 

23 amended as follows: 

24 (1) In section 8(b)(1)(B) (15 U.S.C. 

25 637(b)(1)(B)), by striking ‘‘Executives (SCORE)’’ 


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1 and inserting ‘‘Executives (in this Act referred to as 

2 ‘SCORE’)’’. 

3 (2) In section 7(m)(3)(A)(i)(VIII) (15 U.S.C. 

4 636(m)(3)(A)(i)(VIII)), by striking ‘‘the Service 

5 Corps of Retired Executives’’ and inserting 

6 ‘‘SCORE’’. 

7 (3) In section 20 (15 U.S.C. 631 note)— 

8 (A) in subsection (d)(1)(E), by striking 

9 ‘‘the Service Corps of Retired Executives pro10 gram’’ and inserting ‘‘SCORE’’; and 

11 (B) in subsection (e)(1)(E), by striking 

12 ‘‘the Service Corps of Retired Executives pro13 gram’’ and inserting ‘‘SCORE’’. 

14 (4) In section 33(b)(2) (15 U.S.C. 657c(b)(2)), 

15 by striking ‘‘Service Corps of Retired Executives’’ 

16 and inserting ‘‘SCORE’’. 

17 (b) ELIMINATION OF ACE.—Section 8(b)(1)(B) of 

18 the Small Business Act (15 U.S.C. 637(b)(1)(B)), as 

19 amended, is further amended by striking ‘‘and an Active 

20 Corps of Executives (ACE)’’. 

21 SEC. 1007. AUTHORIZATION OF APPROPRIATIONS. 

22 Section 20 of the Small Business Act (15 U.S.C. 631 

23 note) is amended by inserting the following new subsection 

24 after subsection (e): 


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1 ‘‘(f) AUTHORIZATION OF APPROPRIATIONS FOR

2 SCORE.—There is authorized to be appropriated 

3 $11,000,000 for SCORE under section 8(b)(1) for each 

4 of the fiscal years 2010 and 2011.’’. 

5 Subtitle B—Small Business Goals 

6 SEC. 1011. SMALL BUSINESS GOALS. 

7 Section 15(g)(1) of the Small Business Act (15 

8 U.S.C. 644(g)) is amended— 

9 (1) in paragraph (1), by striking ‘‘23 percent’’ 

10 and inserting ‘‘30 percent’’; and 

11 (2) by adding at the end the following: 

12 ‘‘(3)(A) Notwithstanding paragraph (1), the Presi13 dent may permit the National Aeronautics and Space Ad14 ministration and the Department of Energy to treat the 

15 Governmentwide goal for participation by small business 

16 concerns as though such goal were 23 percent. 

17 ‘‘(B) Not later than 60 days after providing permis18 sion under subparagraph (A), the President shall provide 

19 notice to the Office of Advocacy in the Small Business.’’. 

20 SEC. 1012. AGENCY GOAL NEGOTIATION. 

21 (a) NEGOTIATION.—Section 15(g)(1) of the Small 

22 Business Act (15 U.S.C. 644(g)(1)) is amended by strik23 ing ‘‘The President shall annually establish Government24 wide goals for procurement contracts’’ and inserting ‘‘The 

25 President shall before the close of each fiscal year estabVerDate Nov 24 2008 01:35 Apr 23, 2010 Jkt 089200 PO 00000 Frm 00077 Fmt 6652 Sfmt 6201 E:\BILLS\H5109.IH H5109

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1 lish new Governmentwide procurement goals for the fol2 lowing fiscal year for procurement contracts.’’. 

3 (b) MINIMUM LEVEL.—Section 15(g)(1) of the Small 

4 Business Act (15 U.S.C. 644(g)(1)), as amended by this 

5 Act, is further amended by striking ‘‘Notwithstanding the 

6 Governmentwide goal, each agency shall have an annual 

7 goal’’ and inserting ‘‘Each agency shall have an annual 

8 goal, not lower than the Governmentwide goal,’’. 

9 SEC. 1013. PROCEDURES AND METHODS FOR GOAL 

10 ACHIEVEMENT. 

11 (a) GOAL RESPONSIBILITY.—Section 15(g)(2) of the 

12 Small Business Act (15 U.S.C. 644(g)(2)) is amended by 

13 adding the following after the first sentence: ‘‘The goals 

14 established by the head of each agency shall be appor15 tioned within the agency to a contracting office or offices 

16 (as that term is defined in section 2.101 of title 48, Code 

17 of Federal Regulations on January 1, 2009) that reports 

18 to a career appointee in the Senior Executive Service.’’. 

19 (b) SENIOR EXECUTIVE SERVICE.— 

20 (1) PURPOSES.—Section 3131 of title 5, United 

21 States Code, is amended— 

22 (A) in paragraph (13) by striking the 

23 ‘‘and’’ at the end; 

24 (B) in paragraph (14) by striking the pe25 riod at the end and inserting ‘‘; and’’; and 


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1 (C) by adding at the end the following: 

2 ‘‘(15) ensure that the Government achieves the 

3 small business procurement goals set forth in section 

4 15 of the Small Business Act (15 U.S.C. 644).’’. 

5 (2) TRAINING.—Section 3396(a) of title 5, 

6 United States Code, is amended by adding at the 

7 end the following: ‘‘The training provided to senior 

8 executives shall include Federal procurement policy, 

9 including the procurement provisions of the Small 

10 Business Act.’’. 

11 (3) LIMITATION ON SABBATICALS.—Section 

12 3396(c)(2) of title 5, United States Code is amend13 ed— 

14 (A) in subparagraph (B)(iii) by striking 

15 the ‘‘and’’ at the end; 

16 (B) in subparagraph (C) by striking the 

17 period at the end and inserting ‘‘; or’’; and 

18 (C) by inserting after subparagraph (C) 

19 the following: 

20 ‘‘(D) who oversees a contracting office that 

21 did not meet its small business procurement 

22 goals established annually in accordance with 

23 the procedures of section 15(g)(2) of the Small 

24 Business Act (15 U.S.C. 644(g)(2)).’’. 


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1 (4) LIMITATION ON INCENTIVE AWARDS.—An 

2 employee in the Senior Executive Service shall not 

3 be eligible for any incentive award specified in sub4 chapter I, chapter 45 of title 5, United States Code, 

5 if the contracting office which reports to that mem6 ber of the Senior Executive Service fails to meet the 

7 procurement goals established annually in accord8 ance with the procedures of section 15(g)(2) of the 

9 Small Business Act (15 U.S.C. 644(g)(2)). Any 

10 member of the Senior Executive Service, whether ca11 reer or noncareer, to whom that member of the Sen12 ior Executive Service reports also shall not be eligi13 ble for any incentive award specified in subchapter 

14 I, chapter 45 of title 5, United States Code. 

15 SEC. 1014. REPORTING REQUIREMENTS. 

16 Section 15(h) of the Small Business Act (15 U.S.C. 

17 644(h)) is amended by adding at the end the following: 

18 ‘‘(4) By November 1 of each year, the head of each 

19 Federal agency shall submit to Congress a report speci20 fying the percentage of contracts awarded by that agency 

21 for the immediate preceding fiscal year that were awarded 

22 to small business concerns. If the percentage is less than 

23 the goal established by the head of the agency pursuant 

24 to this section, the head of the agency shall, in the report, 

25 explain why the agency did not reach the goal and what 


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1 will be done to ensure that the goal for the following fiscal 

2 year will be achieved.’’. 

3 Subtitle C—Contract Bundling 

4 SEC. 1021. DEFINITIONS OF BUNDLING OF CONTRACT RE5 QUIREMENTS. 

6 Section 3(o) of the Small Business Act (15 U.S.C. 

7 632(o)) is amended to read as follows: 

8 ‘‘(o) DEFINITIONS OF BUNDLING OF CONTRACT RE9 QUIREMENTS AND RELATED TERMS.—For purposes of 

10 this Act: 

11 ‘‘(1) BUNDLED CONTRACT.— 

12 ‘‘(A) IN GENERAL.—The term ‘bundled 

13 contract’ means a contract or order that is en14 tered into to meet procurement requirements 

15 that are consolidated in a bundling of contract 

16 requirements, without regard to its designation 

17 by the procuring agency or whether a study of 

18 the effects of the solicitation on civilian or mili19 tary personnel has been made. 

20 ‘‘(B) EXCEPTIONS.—The term does not in21 clude— 

22 ‘‘(i) a contract or order with an aggre23 gate dollar value below the dollar threshold 

24 specified in paragraph (4); or 


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1 ‘‘(ii) a contract or order that is en2 tered into to meet procurement require3 ments, all of which are exempted require4 ments under paragraph (5). 

5 ‘‘(2) BUNDLING OF CONTRACT REQUIRE6 MENTS.— 

7 ‘‘(A) IN GENERAL.—The term ‘bundling of 

8 contract requirements’ means the use of any 

9 bundling methodology to satisfy 2 or more pro10 curement requirements for new or existing 

11 goods or services, including any construction 

12 services, that is likely to be unsuitable for 

13 award to a small business concern due to— 

14 ‘‘(i) the diversity, size, or specialized 

15 nature of the elements of the performance 

16 specified; 

17 ‘‘(ii) the aggregate dollar value of the 

18 anticipated award; 

19 ‘‘(iii) the geographical dispersion of 

20 the contract or order performance; or 

21 ‘‘(iv) any combination of the factors 

22 described in clauses (i), (ii), or (iii). 

23 ‘‘(B) EXCEPTIONS.—The term does not in24 clude— 


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1 ‘‘(i) the use of a bundling method2 ology for an anticipated award with an ag3 gregate dollar value below the threshold 

4 specified in paragraph (4); or 

5 ‘‘(ii) the use of a bundling method6 ology to meet procurement requirements, 

7 all of which are exempted under paragraph 

8 (5). 

9 ‘‘(3) BUNDLING METHODOLOGY.—The term 

10 ‘bundling methodology’ means— 

11 ‘‘(A) a solicitation to obtain offers for a 

12 single contract or order, or a multiple award 

13 contract or order; 

14 ‘‘(B) a solicitation of offers for the 

15 issuance of a task or a delivery order under an 

16 existing single or multiple award contract or 

17 order; or 

18 ‘‘(C) the creation of any new procurement 

19 requirements that permit a consolidation of 

20 contract or order requirements. 

21 ‘‘(4) DOLLAR THRESHOLD.—The term ‘dollar 

22 threshold’ means— 

23 ‘‘(A) $65,000,000 if solely for construction 

24 services; and 

25 ‘‘(B) $1,500,000 in all other cases. 


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1 ‘‘(5) EXEMPTED REQUIREMENTS.—The term 

2 ‘exempted requirement’ means one or more of the 

3 following: 

4 ‘‘(A) A procurement requirement solely for 

5 items that are not commercial items (as the 

6 term ‘commercial item’ is defined in section 

7 4(12) of the Office of Federal Procurement Pol8 icy Act (41 U.S.C. 403(12)) but this subpara9 graph shall not apply to any procurement re10 quirement for a contract for goods or services 

11 provided by a business classified in sector 23 of 

12 the North American Industrial Classification 

13 System. 

14 ‘‘(B) A procurement requirement with re15 spect to which a determination that it is unsuit16 able for award to a small business concern has 

17 previously been made by the agency. However, 

18 the Administrator shall have authority to review 

19 and reverse such a determination for purposes 

20 of this paragraph and, if the Administrator 

21 does reverse that determination, the term ‘ex22 empted requirement’ shall not apply to that 

23 procurement requirement. 

24 ‘‘(6) PROCUREMENT REQUIREMENT.—The term 

25 ‘procurement requirement’ means a determination 


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1 by an agency that a specified good or service is 

2 needed to satisfy the mission of the agency.’’. 

3 SEC. 1022. JUSTIFICATION. 

4 (a) STATEMENT OF BUNDLED CONTRACT REQUIRE5 MENTS.—Section 15(a) of the Small Business Act (15 

6 U.S.C. 644(a)) is amended— 

7 (1) by striking ‘‘is in a quantity or estimated 

8 dollar value the magnitude of which renders small 

9 business prime contract participation unlikely’’ and 

10 inserting ‘‘would now be combined with other re11 quirements for goods and services’’; 

12 (2) by striking ‘‘(2) why delivery schedules’’ 

13 and inserting ‘‘(2) the names, addresses and size of 

14 the incumbent contract holders, if applicable; (3) a 

15 description of the industries that might be interested 

16 in bidding on the contract requirements; (4) the 

17 number of small businesses listed in the industry 

18 categories that could be excluded from future bid19 ding if the contract is combined or packaged, includ20 ing any small business bidders that had bid on pre21 vious procurement requirements that are included in 

22 the bundling of contract requirements; (5) why deliv23 ery schedules’’; 


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1 (3) by striking ‘‘(3) why the proposed acquisi2 tion’’ and inserting ‘‘(6) why the proposed acquisi3 tion’’; 

4 (4) by striking ‘‘(4) why construction’’ and in5 serting ‘‘(7) why construction’’; 

6 (5) by striking ‘‘(5) why the agency’’ and in7 serting ‘‘(8) why the agency’’; 

8 (6) by striking ‘‘justified’’ and inserting ‘‘justi9 fied. The statement also shall set forth the proposed 

10 procurement strategy required by subsection (e) and, 

11 if applicable, the specifications required by sub12 section (e)(3). Concurrently, the statement shall be 

13 made available to the public, including through dis14 semination in the Federal contracting opportunities 

15 database.’’; and 

16 (7) by inserting after ‘‘prime contracting oppor17 tunities.’’ the following: ‘‘If no notification of the 

18 procurement and accompanying statement is re19 ceived, but the Administrator determines that there 

20 is cause to believe the contract combines require21 ments or a contract (single or multiple award) or 

22 task or delivery order for construction services or in23 cludes unjustified bundling, then the Administrator 

24 can demand that such a statement of work goods or 

25 services be completed by the procurement activity 


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1 and sent to the Procurement Center Representative 

2 and the solicitation process postponed for at least 10 

3 days but no more than 30 days to allow the Admin4 istrator to review the statement and make rec5 ommendations as described in this section before 

6 procurement is continued.’’. 

7 (b) SUBSTANTIAL MEASURABLE BENEFITS.—Section 

8 15(e)(2)(C) of the Small Business Act (15 U.S.C. 644(e)) 

9 is amended by adding at the end the following: ‘‘Cost sav10 ings shall not include any reduction in the use of military 

11 interdepartmental purchase requests or any similar trans12 fer funds among Federal agencies for the use of a contract 

13 issued by another Federal agency.’’. 

14 SEC. 1023. APPEALS. 

15 Section 15(a) of the Small Business Act (15 U.S.C. 

16 644(a)), as amended by this Act, is further amended— 

17 (1) by striking ‘‘If a proposed procurement in18 cludes in its statement’’ and inserting ‘‘If a proposed 

19 procurement would adversely affect one or more 

20 small business concerns, including, but not limited 

21 to, the potential loss of an existing contract, or if a 

22 proposed procurement includes in its statement’’; 

23 and 

24 (2) by inserting before ‘‘Whenever the Adminis25 trator and the contracting procurement agency fail 


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1 to agree,’’ the following: ‘‘If a small business con2 cern would be adversely affected, directly or indi3 rectly, by the procurement as proposed, and that 

4 small business concern or a trade association of 

5 which that small business concern is a member so 

6 requests, the Administrator may take action to fur7 ther the interests of the small business.’’. 

8 SEC. 1024. THIRD-PARTY REVIEW. 

9 Section 8(d) of the Contract Disputes Act of 1978 

10 (41 U.S.C. 607(d)) is amended— 

11 (1) by striking ‘‘(d) The Armed Services 

12 Board’’ and inserting ‘‘(d)(1) The Armed Services 

13 Board’’; and 

14 (2) by inserting at the end the following: 

15 ‘‘(2) CONTRACT BUNDLING.— 

16 ‘‘(A) IN GENERAL.—Whenever the head of a 

17 contracting agency makes a decision in accordance 

18 with section 15(a) of the Small Business Act con19 cerning the Administrator of the Small Business Ad20 ministration’s challenge to a bundling of contract re21 quirements, the Administrator, within ten days after 

22 such decision may file a challenge with the appro23 priate agency board of contract appeals. 

24 ‘‘(B) PROCEDURE.—The board shall provide 

25 the Administrator and the head of the contracting 


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1 agency the opportunity to provide their views on the 

2 disputed contract. No oral testimony or oral argu3 ment shall be permitted. The board shall render its 

4 decision within thirty days after the appeal has been 

5 filed. The decision of the board shall be final.’’. 

6 Subtitle D—Small Business 

7 Subcontracting 

8 SEC. 1031. GOOD FAITH COMPLIANCE WITH SUBCON9 TRACTING PLANS. 

10 Section 8(d)(10) of the Small Business Act (15 

11 U.S.C. 637(d)(10)) is amended by— 

12 (1) by striking ‘‘and’’ at the end of subpara13 graph (B); 

14 (2) by striking the period at the end of sub15 paragraph (C) and inserting ‘‘; and’’; and 

16 (3) by adding at the end the following: 

17 ‘‘(D) not later than 180 days after enact18 ment of the Small Business Bill of Rights, the 

19 Administrator shall, after the opportunity for 

20 notice and comment, promulgate regulations 

21 governing the Administrator’s review of subcon22 tracting plans including the standards for de23 termining good faith compliance with the sub24 contracting plans.’’. 


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1 SEC. 1032. LIMITATIONS ON SUBCONTRACTING. 

2 (a) REGULATIONS FOR CONTRACT ADMINISTRA3 TION.—Section 15(o) of the Small Business Act (15 

4 U.S.C. 644(o)) is amended by adding at the end the fol5 lowing: 

6 ‘‘(4) Not later than 180 days after enactment of the 

7 Small Business Bill of Rights, the Administrator shall, 

8 after the opportunity for notice and comment, promulgate 

9 regulations that specify the responsibilities that each agen10 cy and the Administration personnel will have in enforcing 

11 the restrictions set forth in paragraph (1). Such regula12 tions also shall specify reporting and recordkeeping re13 quirements for contracts covered by paragraph (1).’’. 

14 (b) CONTRACTOR PENALTIES.—Section 16 of the 

15 Small Business Act (15 U.S.C. 645) is amended by adding 

16 at the end the following: 

17 ‘‘(g) A small business that violates the requirements 

18 of section 15(o)(1) of the Small Business Act shall be sub19 ject to the penalties set forth in subsection (d).’’. 

20 SEC. 1033. CRIMINAL VIOLATIONS. 

21 Section 1001(a) of title 18, United States Code, is 

22 amended— 

23 (1) in paragraph (2) by striking the ‘‘or’’ at the 

24 end; 

25 (2) in paragraph (3) by adding ‘‘or’’ at the end; 

26 (3) inserting after paragraph (3) the following: 


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1 ‘‘(4) makes in writing or electronically a false 

2 statement concerning status as a small business con3 cern or compliance with the requirements of the 

4 Small Business Act in an effort to obtain, retain, or 

5 complete a Federal Government contract;’’; and 

6 (4) by adding at the end the following: ‘‘For 

7 violation of paragraph (4) of this subsection, not8 withstanding section 3571(e), the fine under this 

9 title shall be the total value of the contract or 

10 $1,000,000, whichever is greater.’’. 

11 TITLE XI—OFFSETS 

12 SEC. 1101. TRANSFER OF UNOBLIGATED STIMULUS FUNDS. 

13 (a) RESCISSION.—Effective on the date of the enact14 ment of this Act, any unobligated balances available on 

15 such date of funds made available by division A of the 

16 American Recovery and Reinvestment Act of 2009 (Public 

17 Law 111–5), other than under the heading ‘‘Federal 

18 Highway Administration-Highway Infrastructure Invest19 ment’’ in title XII of such division, are rescinded and such 

20 provisions are repealed. 

21 (b) REPEAL.—The provisions of division B of the 

22 American Recovery and Reinvestment Act of 2009 (Public 

23 Law 111–5), other than titles I and II of such division 

24 are repealed. 


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1 (c) TRANSFER OF FUNDS.—The total amount re2 scinded by this section shall be deposited in the Federal 

3 Treasury. 

4 TITLE XII—DEBT REDUCTION 

5 SEC. 1201. REPEAL OF THE TROUBLED ASSET RELIEF PRO6 GRAM. 

7 (a) IN GENERAL.—Notwithstanding any other provi8 sion of law, the authorities provided under section 101(a) 

9 of the Emergency Economic Stabilization Act of 2008 (ex10 cluding section 101(a)(3)) and under section 102 of such 

11 Act shall terminate on the date of enactment of this Act. 

12 (b) RETURNED TARP MONEY TO BE USED FOR

13 DEFICIT REDUCTION.—Notwithstanding any other provi14 sion of law, all assistance received under title I of the 

15 Emergency Economic Stabilization Act of 2008 that is re16 paid on or after the date of enactment of this Act, along 

17 with any dividends, profits, or other funds paid to the Gov18 ernment based on such assistance on or after the date of 

19 enactment of this Act, shall be deposited in the Treasury 

20 to reduce the deficit. 

21 (c) LOWERING OF NATIONAL DEBT LIMIT TO COR22 RESPOND TO TARP REPAYMENTS.—Section 3101 of title 

23 31, United States Code, is amended— 

24 (1) in subsection (b), by inserting after the dol25 lar limitation contained in such subsection the folVerDate Nov 24 2008 01:35 Apr 23, 2010 Jkt 089200 PO 00000 Frm 00092 Fmt 6652 Sfmt 6201 E:\BILLS\H5109.IH H5109

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1 lowing: ‘‘, as such amount is reduced by the amount 

2 described under subsection (d)’’; and 

3 (2) by adding at the end the following new sub4 section: 

5 ‘‘(d) The amount described under this subsection is 

6 the amount that equals the amount of all assistance re7 ceived under title I of the Emergency Economic Stabiliza8 tion Act of 2008 that is repaid on or after the date of 

9 enactment of the Small Business Bill of Rights, along with 

10 any dividends, profits, or other funds paid to the Govern11 ment based on such assistance on or after the date of en12 actment of the Small Business Bill of Rights.’’. 

13 TITLE XIII—DEFINITIONS 

14 SEC. 1301. DEFINITIONS. 

15 In this Act: 

16 (1) The term ‘‘Administrator’’ means the Ad17 ministrator of Small Business Administration. 

18 (2) The term ‘‘small business concern’’ has the 

19 meaning given such term under section 3 of the 

20 Small Business Act. 

Æ 


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