I 

111TH CONGRESS 

1ST SESSION H. R. 2770 

To amend title 38, United States Code, to modify and update provisions 

of law relating to nonprofit research and education corporations, and 

for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

JUNE 9, 2009 

Mr. FILNER (for himself and Mr. BUYER) introduced the following bill; which 

was referred to the Committee on Veterans’ Affairs 

A BILL 

To amend title 38, United States Code, to modify and update 

provisions of law relating to nonprofit research and education corporations, 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. 

4 This Act may be cited as the ‘‘Veterans Nonprofit 

5 Research and Education Corporations Enhancement Act 

6 of 2009’’. 


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1 SEC. 2. GENERAL AUTHORITIES ON ESTABLISHMENT OF 

2 CORPORATIONS. 

3 (a) AUTHORIZATION OF MULTI-MEDICAL CENTER

4 RESEARCH CORPORATIONS.— 

5 (1) IN GENERAL.—Section 7361 of title 38, 

6 United States Code, is amended— 

7 (A) by redesignating subsection (b) as sub8 section (e); and 

9 (B) by inserting after subsection (a) the 

10 following new subsection (b): 

11 ‘‘(b)(1) Subject to paragraph (2), a corporation es12 tablished under this subchapter may facilitate the conduct 

13 of research, education, or both at more than one medical 

14 center. Such a corporation shall be known as a ‘multi-med15 ical center research corporation’. 

16 ‘‘(2) The board of directors of a multi-medical center 

17 research corporation under this subsection shall include 

18 the official at each Department medical center concerned 

19 who is, or who carries out the responsibilities of, the med20 ical center director of such center as specified in section 

21 7363(a)(1)(A)(i) of this title. 

22 ‘‘(3) In facilitating the conduct of research, edu23 cation, or both at more than one Department medical cen24 ter under this subchapter, a multi-medical center research 

25 corporation may administer receipts and expenditures reVerDate Nov 24 2008 04:41 Jun 10, 2009 Jkt 079200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H2770.IH H2770

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1 lating to such research, education, or both, as applicable, 

2 performed at the Department medical centers concerned.’’. 

3 (2) EXPANSION OF EXISTING CORPORATIONS TO

4 MULTI-MEDICAL CENTER RESEARCH CORPORA5 TIONS.—Such section is further amended by adding 

6 at the end the following new subsection: 

7 ‘‘(f) A corporation established under this subchapter 

8 may act as a multi-medical center research corporation 

9 under this subchapter in accordance with subsection (b) 

10 if— 

11 ‘‘(1) the board of directors of the corporation 

12 approves a resolution permitting facilitation by the 

13 corporation of the conduct of research, education, or 

14 both at the other Department medical center or 

15 medical centers concerned; and 

16 ‘‘(2) the Secretary approves the resolution of 

17 the corporation under paragraph (1).’’. 

18 (b) RESTATEMENT AND MODIFICATION OF AUTHORI19 TIES ON APPLICABILITY OF STATE LAW.— 

20 (1) IN GENERAL.—Section 7361 of such title, 

21 as amended by subsection (a) of this section, is fur22 ther amended by inserting after subsection (b) the 

23 following new subsection (c): 

24 ‘‘(c) Any corporation established under this sub25 chapter shall be established in accordance with the nonVerDate Nov 24 2008 04:41 Jun 10, 2009 Jkt 079200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H2770.IH H2770

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1 profit corporation laws of the State in which the applicable 

2 Department medical center is located and shall, to the ex3 tent not inconsistent with any Federal law, be subject to 

4 the laws of such State. In the case of any multi-medical 

5 center research corporation that facilitates the conduct of 

6 research, education, or both at Department medical cen7 ters located in different States, the corporation shall be 

8 established in accordance with the nonprofit corporation 

9 laws of the State in which one of such Department medical 

10 centers is located.’’. 

11 (2) CONFORMING AMENDMENT.—Section 7365 

12 of such title is repealed. 

13 (c) CLARIFICATION OF STATUS OF CORPORATIONS.— 

14 Section 7361 of such title, as amended by this section, 

15 is further amended— 

16 (1) in subsection (a), by striking the second 

17 sentence; and 

18 (2) by inserting after subsection (c) the fol19 lowing new subsection (d): 

20 ‘‘(d)(1) Except as otherwise provided in this sub21 chapter or under regulations prescribed by the Secretary, 

22 any corporation established under this subchapter, and its 

23 officers, directors, and employees, shall be required to 

24 comply only with those Federal laws, regulations, and exVerDate Nov 24 2008 04:41 Jun 10, 2009 Jkt 079200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H2770.IH H2770

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1 ecutive orders and directives that apply generally to pri2 vate nonprofit corporations. 

3 ‘‘(2) A corporation under this subchapter is not— 

4 ‘‘(A) owned or controlled by the United States; 

5 or 

6 ‘‘(B) an agency or instrumentality of the 

7 United States.’’. 

8 (d) REINSTATEMENT OF REQUIREMENT FOR

9 501(C)(3) STATUS OF CORPORATIONS.—Subsection (e) of 

10 section 7361 of such title, as redesignated by subsection 

11 (a)(1) of this section, is further amended by inserting 

12 ‘‘section 501(c)(3) of’’ after ‘‘exempt from taxation 

13 under’’. 

14 SEC. 3. CLARIFICATION OF PURPOSES OF CORPORATIONS. 

15 (a) CLARIFICATION OF PURPOSES.—Subsection (a) 

16 of section 7362 of title 38, United States Code, is amend17 ed— 

18 (1) in the first sentence— 

19 (A) by striking ‘‘Any corporation’’ and all 

20 that follows through ‘‘facilitate’’ and inserting 

21 ‘‘A corporation established under this sub22 chapter shall be established to provide a flexible 

23 funding mechanism for the conduct of approved 

24 research and education at one or more DepartVerDate Nov 24 2008 04:41 Jun 10, 2009 Jkt 079200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H2770.IH H2770

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1 ment medical centers and to facilitate functions 

2 related to the conduct of’’; and 

3 (B) by inserting before the period at the 

4 end the following: ‘‘or centers’’; and 

5 (2) in the second sentence, by inserting ‘‘or cen6 ters’’ after ‘‘medical center’’. 

7 (b) MODIFICATION OF DEFINED TERM RELATING TO

8 EDUCATION AND TRAINING.—Subsection (b) of such sec9 tion is amended in the matter preceding paragraph (1) 

10 by striking ‘‘the term ‘education and training’ ’’ and in11 serting ‘‘the term ‘education’ includes education and train12 ing and’’. 

13 (c) REPEAL OF ROLE OF CORPORATIONS WITH RE14 SPECT TO FELLOWSHIPS.—Paragraph (1) of subsection 

15 (b) of such section is amended by striking the flush matter 

16 following subparagraph (C). 

17 (d) AVAILABILITY OF EDUCATION FOR FAMILIES OF

18 VETERAN PATIENTS.—Paragraph (2) of subsection (b) of 

19 such section is amended by striking ‘‘to patients and to 

20 the families’’ and inserting ‘‘and includes education and 

21 training for patients and families’’. 


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1 SEC. 4. MODIFICATION OF REQUIREMENTS FOR BOARDS 

2 OF DIRECTORS OF CORPORATIONS. 

3 (a) REQUIREMENTS FOR DEPARTMENT BOARD MEM4 BERS.—Paragraph (1) of section 7363(a) of title 38, 

5 United States Code, is amended to read as follows: 

6 ‘‘(1) with respect to the Department medical 

7 center— 

8 ‘‘(A)(i) the director (or directors of each 

9 Department medical center, in the case of a 

10 multi-medical center research corporation); 

11 ‘‘(ii) the chief of staff; and 

12 ‘‘(iii) as appropriate for the activities of 

13 such corporation, the associate chief of staff for 

14 research and the associate chief of staff for 

15 education; or 

16 ‘‘(B) in the case of a Department medical 

17 center at which one or more of the positions re18 ferred to in subparagraph (A) do not exist, the 

19 official or officials who are responsible for car20 rying out the responsibilities of such position or 

21 positions at the Department medical center; 

22 and’’. 

23 (b) REQUIREMENTS FOR NON-DEPARTMENT BOARD

24 MEMBERS.—Paragraph (2) of such section is amended— 

25 (1) by inserting ‘‘not less than two’’ before 

26 ‘‘members’’; and 


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1 (2) by striking ‘‘and who’’ and all that follows 

2 through the period at the end and inserting ‘‘and 

3 who have backgrounds, or business, legal, financial, 

4 medical, or scientific expertise, of benefit to the op5 erations of the corporation.’’. 

6 (c) CONFLICTS OF INTEREST.—Subsection (c) of sec7 tion 7363 of such title is amended by striking ‘‘, employed 

8 by, or have any other financial relationship with’’ and in9 serting ‘‘or employed by’’. 

10 SEC. 5. CLARIFICATION OF POWERS OF CORPORATIONS. 

11 (a) IN GENERAL.—Section 7364 of title 38, United 

12 States Code, is amended to read as follows: 

13 ‘‘§ 7364. General powers 

14 ‘‘(a) IN GENERAL.—(1) A corporation established 

15 under this subchapter may, solely to carry out the pur16 poses of this subchapter— 

17 ‘‘(A) accept, administer, retain, and spend 

18 funds derived from gifts, contributions, grants, fees, 

19 reimbursements, and bequests from individuals and 

20 public and private entities; 

21 ‘‘(B) enter into contracts and agreements with 

22 individuals and public and private entities; 

23 ‘‘(C) subject to paragraph (2), set fees for edu24 cation and training facilitated under section 7362 of 


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1 this title, and receive, retain, administer, and spend 

2 funds in furtherance of such education and training; 

3 ‘‘(D) reimburse amounts to the applicable ap4 propriation account of the Department for the Office 

5 of General Counsel for any expenses of that Office 

6 in providing legal services attributable to research 

7 and education agreements under this subchapter; 

8 and 

9 ‘‘(E) employ such employees as the corporation 

10 considers necessary for such purposes and fix the 

11 compensation of such employees. 

12 ‘‘(2) Fees charged pursuant to paragraph (1)(C) for 

13 education and training described in that paragraph to in14 dividuals who are officers or employees of the Department 

15 may not be paid for by any funds appropriated to the De16 partment. 

17 ‘‘(3) Amounts reimbursed to the Office of General 

18 Counsel under paragraph (1)(D) shall be available for use 

19 by the Office of the General Counsel only for staff and 

20 training, and related travel, for the provision of legal serv21 ices described in that paragraph and shall remain available 

22 for such use without fiscal year limitation. 

23 ‘‘(b) TRANSFER AND ADMINISTRATION OF FUNDS.— 

24 (1) Except as provided in paragraph (2), any funds re25 ceived by the Secretary for the conduct of research or eduVerDate Nov 24 2008 21:56 Jun 10, 2009 Jkt 079200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H2770.IH H2770

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1 cation at a Department medical center or centers, other 

2 than funds appropriated to the Department, may be trans3 ferred to and administered by a corporation established 

4 under this subchapter for such purposes. 

5 ‘‘(2) A Department medical center may reimburse the 

6 corporation for all or a portion of the pay, benefits, or 

7 both of an employee of the corporation who is assigned 

8 to the Department medical center if the assignment is car9 ried out pursuant to subchapter VI of chapter 33 of title 

10 5. 

11 ‘‘(3) A Department medical center may retain and 

12 use funds provided to it by a corporation established under 

13 this subchapter. Such funds shall be credited to the appli14 cable appropriation account of the Department and shall 

15 be available, without fiscal year limitation, for the pur16 poses of that account. 

17 ‘‘(c) RESEARCH PROJECTS.—Except for reasonable 

18 and usual preliminary costs for project planning before its 

19 approval, a corporation established under this subchapter 

20 may not spend funds for a research project unless the 

21 project is approved in accordance with procedures pre22 scribed by the Under Secretary for Health for research 

23 carried out with Department funds. Such procedures shall 

24 include a scientific review process. 


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1 ‘‘(d) EDUCATION ACTIVITIES.—Except for reason2 able and usual preliminary costs for activity planning be3 fore its approval, a corporation established under this sub4 chapter may not spend funds for an education activity un5 less the activity is approved in accordance with procedures 

6 prescribed by the Under Secretary for Health. 

7 ‘‘(e) POLICIES AND PROCEDURES.—The Under Sec8 retary for Health may prescribe policies and procedures 

9 to guide the spending of funds by corporations established 

10 under this subchapter that are consistent with the purpose 

11 of such corporations as flexible funding mechanisms and 

12 with Federal and State laws and regulations, and execu13 tive orders, circulars, and directives that apply generally 

14 to the receipt and expenditure of funds by nonprofit orga15 nizations exempt from taxation under section 501(c)(3) of 

16 the Internal Revenue Code of 1986.’’. 

17 (b) CONFORMING AMENDMENT.—Section 7362(a) of 

18 such title, as amended by section 3(a)(1) of this Act, is 

19 further amended by striking the last sentence. 

20 SEC. 6. REDESIGNATION OF SECTION 7364A OF TITLE 38, 

21 UNITED STATES CODE. 

22 (a) REDESIGNATION.—Section 7364A of title 38, 

23 United States Code, is redesignated as section 7365 of 

24 such title. 


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1 (b) CLERICAL AMENDMENTS.—The table of sections 

2 at the beginning of chapter 73 of such title is amended— 

3 (1) by striking the item relating to section 

4 7364A; and 

5 (2) by striking the item relating to section 7365 

6 and inserting the following new item: 

‘‘7365. Coverage of employees under certain Federal tort claims laws.’’. 

7 SEC. 7. IMPROVED ACCOUNTABILITY AND OVERSIGHT OF 

8 CORPORATIONS. 

9 (a) ADDITIONAL INFORMATION IN ANNUAL RE10 PORTS.—Subsection (b) of section 7366 of title 38, United 

11 States Code, is amended to read as follows: 

12 ‘‘(b)(1) Each corporation shall submit to the Sec13 retary each year a report providing a detailed statement 

14 of the operations, activities, and accomplishments of the 

15 corporation during that year. 

16 ‘‘(2)(A) A corporation with revenues in excess of 

17 $300,000 for any year shall obtain an audit of the cor18 poration for that year. 

19 ‘‘(B) A corporation with annual revenues between 

20 $10,000 and $300,000 shall obtain an audit of the cor21 poration at least once every three years. 

22 ‘‘(C) Any audit under this paragraph shall be per23 formed by an independent auditor. 

24 ‘‘(3) The corporation shall include in each report to 

25 the Secretary under paragraph (1) the following: 


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1 ‘‘(A) The most recent audit of the corporation 

2 under paragraph (2). 

3 ‘‘(B) The most recent Internal Revenue Service 

4 Form 990 ‘Return of Organization Exempt from In5 come Tax’ or equivalent and the applicable schedules 

6 under such form.’’. 

7 (b) CONFIRMATION OF APPLICATION OF CONFLICT

8 OF INTEREST REGULATIONS TO APPROPRIATE CORPORA9 TION POSITIONS.—Subsection (c) of such section is 

10 amended— 

11 (1) by striking ‘‘laws and’’ each place it ap12 pears; 

13 (2) in paragraph (1)— 

14 (A) by inserting ‘‘each officer and’’ after 

15 ‘‘under this subchapter,’’; and 

16 (B) by striking ‘‘, and each employee of 

17 the Department’’ and all that follows through 

18 ‘‘during any year’’; and 

19 (3) in paragraph (2)— 

20 (A) by inserting ‘‘, officer,’’ after 

21 ‘‘verifying that each director’’; and 

22 (B) by striking ‘‘in the same manner’’ and 

23 all that follows before the period at the end. 

24 (c) ESTABLISHMENT OF APPROPRIATE PAYEE RE25 PORTING THRESHOLD.—Subsection (d)(3)(C) of such secVerDate Nov 24 2008 04:41 Jun 10, 2009 Jkt 079200 PO 00000 Frm 00013 Fmt 6652 Sfmt 6201 E:\BILLS\H2770.IH H2770

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1 tion is amended by striking ‘‘$35,000’’ and inserting 

2 ‘‘$50,000’’. 

Æ 


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