I 

108TH CONGRESS 

2D SESSION H. R. 4124 

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

for qualified expenditures for medical professional malpractice insurance. 

IN THE HOUSE OF REPRESENTATIVES 

APRIL 1, 2004 

Mr. SANDLIN (for himself, Ms. KAPTUR, Mr. FROST, Mr. BELL, Mr. CROWLEY, Ms. EDDIE BERNICE JOHNSON of Texas, Ms. BERKLEY, Mr. ROSS, 

Mr. LARSON of Connecticut, Mr. CARDOZA, Mr. STRICKLAND, Mr. GONZALEZ, Mr. BERRY, Mr. CLAY, Mr. ISRAEL, Mr. RUPPERSBERGER, Mr. 

MOORE, Mr. REYES, Ms. SOLIS, Mr. HONDA, Mr. LAMPSON, Mr. FORD, 

Mr. MEEKS of New York, Mr. EDWARDS, Mr. DOGGETT, Mr. TURNER

of Texas, Mr. GREEN of Texas, Mr. BAIRD, Mr. LEWIS of Georgia, Mr. 

BOSWELL, and Mr. THOMPSON of California) introduced the following 

bill; which was referred to the Committee on Ways and Means 

A BILL 

To amend the Internal Revenue Code of 1986 to allow a 

business credit for qualified expenditures for medical professional malpractice insurance. 

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

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Medical Malpractice 

5 Relief Act of 2004’’. 
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1 SEC. 2. CREDIT FOR QUALIFIED EXPENDITURES FOR MED2 ICAL PROFESSIONAL MALPRACTICE INSUR3 ANCE. 

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

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

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

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

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

12 insurance expenditure tax credit determined under this 

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

16 ‘‘(b) LIMITATION.— 

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

18 medical malpractice insurance expenditures taken 

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

20 with respect to an eligible person shall not exceed 

21 the amount equal to twice the average of costs of 

22 qualified medical malpractice insurance for similarly 

23 situated eligible persons. 

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

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

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

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

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

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

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

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

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

15 medical malpractice insurance expenditure’ 

16 means so much of any professional insurance 

17 premium, surcharge, payment, or other cost or 

18 expense which is paid or incurred in the taxable 

19 year by an eligible person for the sole purpose 

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

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

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

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

5 work which is reflected in medical malpractice 

6 insurance expenditures, 

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

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

10 otherwise described in this section, and 

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

12 provider, 

13 which meets applicable legal requirements to provide 

14 the health care services involved. 

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

17 ‘‘(A) 20 percent in the case of a person de18 scribed in paragraph (2)(A), 

19 ‘‘(B) 10 percent in the case of a person de20 scribed in paragraph (2)(B), and 

21 ‘‘(C) 15 percent in the case of a person de22 scribed in paragraph (2)(C). 

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

24 of whether persons are similarly situated shall be 

25 made on the basis of medical practices primarily lo-
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1 cated within a statistical area (as defined in section 

2 142(k)(2)) and shall differentiate between specialty 

3 and subspecialty medical practices. 

4 ‘‘(d) ELECTION NOT TO CLAIM CREDIT.—This sec5 tion shall not apply to a taxpayer for any taxable year 

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

7 such taxable year. 

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

9 taxable years beginning after December 31, 2005.’’. 

10 (b) CREDIT MADE PART OF GENERAL BUSINESS

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

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

13 end of paragraph (14), by striking the period at the end 

14 of paragraph (15) and inserting ‘‘, plus’’, and by adding 

15 at the end the following new paragraph: 

16 ‘‘(16) the medical malpractice insurance ex17 penditure tax credit determined under section 

18 45G(a).’’. 

19 (c) LIMITATION ON CARRYBACK.—Section 39(d) of 

20 such Code (relating to transition rules) is amended by 

21 adding at the end the following new paragraph: 

22 ‘‘(11) NO CARRYBACK OF MEDICAL MAL23 PRACTICE INSURANCE EXPENDITURE TAX CREDIT

24 BEFORE EFFECTIVE DATE.—No portion of the un25 used business credit for any taxable year which is 
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1 attributable to the credit determined under section 

2 45G may be carried back to any taxable year begin3 ning before January 1, 2004.’’. 

4 (d) DENIAL OF DOUBLE BENEFIT.—Section 280C of 

5 such Code (relating to certain expenses for which credits 

6 are allowable) is amended by adding at the end the fol7 lowing new subsection: 

8 ‘‘(d) CREDIT FOR MEDICAL MALPRACTICE LIABILITY

9 INSURANCE PREMIUMS.— 

10 ‘‘(1) IN GENERAL.—No deduction shall be al11 lowed for that portion of the qualified medical mal12 practice insurance expenditures otherwise allowable 

13 as a deduction for the taxable year which is equal 

14 to the amount of the credit allowable for the taxable 

15 year under section 45G (determined without regard 

16 to section 38(c)). 

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

18 corporation which is a member of a controlled group 

19 of corporations (within the meaning of section 

20 41(f)(5)) or a trade or business which is treated as 

21 being under common control with other trades or 

22 business (within the meaning of section 

23 41(f)(1)(B)), this subsection shall be applied under 

24 rules prescribed by the Secretary similar to the rules 
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1 applicable under subparagraphs (A) and (B) of sec2 tion 41(f)(1).’’. 

3 (e) GRANTS TO NON-PROFIT HOSPITALS, CLINICS, 

4 AND LONG-TERM CARE PROVIDERS.— 

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

6 Human Services, acting through the Administrator 

7 of the Health Resources and Services Administra8 tion, shall award grants to eligible non-profit hos9 pitals, clinics, and long-term care providers to assist 

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

11 in defraying qualified medical malpractice insurance 

12 expenditures. 

13 (2) ELIGIBLE NON-PROFIT HOSPITAL, CLINIC, 

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

15 receive a grant under paragraph (1) an entity 

16 shall— 

17 (A) be a non-profit hospital, clinic, or long18 term care provider; 

19 (B) be an organization described in section 

20 501(c) of the Internal Revenue Code of 1986 

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

22 such Code for the year for which an application 

23 is submitted under subparagraph (C); and 

24 (C) prepare and submit to the Secretary of 

25 Health and Human Services an application at 
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1 such time, in such manner, and containing such 

2 information as the Secretary may require. 

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

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

5 care provider under paragraph (1) shall equal 15 

6 percent of the amount of the qualified medical mal7 practice insurance expenditures of the hospital, clin8 ic, or long-term care provider for the year involved. 

9 (4) QUALIFIED MEDICAL MALPRACTICE INSUR10 ANCE EXPENDITURE.—In this subsection, the term 

11 ‘‘qualified medical malpractice insurance expendi12 ture’’ means so much of any professional insurance 

13 premium, surcharge, payment or other cost or ex14 pense which is incurred by a non-profit hospital, 

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

16 sole purpose of providing or furnishing general med17 ical malpractice liability insurance for such hospital, 

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

19 twice the average of such costs for similarly situated 

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

21 (5) AUTHORIZATION OF APPROPRIATIONS.— 

22 There are authorized to be appropriated to carry out 

23 this subsection such sums as may be necessary for 

24 each of fiscal years 2005 and 2006. 
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1 (f) CLERICAL AMENDMENT.—The table of sections 

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

3 of such Code is amended by adding at the end the fol4 lowing new item: 

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

5 (g) EFFECTIVE DATE.—The amendments made by 

6 this section shall apply to taxable years beginning after 

7 December 31, 2003. 

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