IB 

Union Calendar No. 123 

111TH CONGRESS 

1ST SESSION H. R. 2770 

[Report No. 111–225] 

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 

JULY 23, 2009 

Additional sponsors: Ms. CORRINE BROWN of Florida, Mr. WALZ, Mr. BURTON of Indiana, Mr. PETERSON, Mr. COURTNEY, Mr. LAMBORN, and Mr. 

MICHAUD

JULY 23, 2009 

Reported with an amendment, committed to the Committee of the Whole 

House on the State of the Union, and ordered to be printed 

[Strike out all after the enacting clause and insert the part printed in italic] 

[For text of introduced bill, see copy of bill as introduced on June 9, 2009] 


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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. 


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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 Re5 search and Education Corporations Enhancement Act of 

6 2009’’. 

7 SEC. 2. GENERAL AUTHORITIES ON ESTABLISHMENT OF 

8 CORPORATIONS. 

9 (a) AUTHORIZATION OF MULTI-MEDICAL CENTER RE10 SEARCH CORPORATIONS.— 

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

12 United States Code, is amended— 

13 (A) by redesignating subsection (b) as sub14 section (e); and 

15 (B) by inserting after subsection (a) the fol16 lowing new subsection (b): 

17 ‘‘(b)(1) Subject to paragraph (2), a corporation estab18 lished under this subchapter may facilitate the conduct of 

19 research, education, or both at more than one medical cen20 ter. Such a corporation shall be known as a ‘multi-medical 

21 center research corporation’. 

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

23 research corporation under this subsection shall include the 

24 official at each Department medical center concerned who 

25 is, or who carries out the responsibilities of, the medical 


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1 center director of such center as specified in section 

2 7363(a)(1)(A)(i) of this title. 

3 ‘‘(3) In facilitating the conduct of research, education, 

4 or both at more than one Department medical center under 

5 this subchapter, a multi-medical center research corpora6 tion may administer receipts and expenditures relating to 

7 such research, education, or both, as applicable, performed 

8 at the Department medical centers concerned.’’. 

9 (2) EXPANSION OF EXISTING CORPORATIONS TO

10 MULTI-MEDICAL CENTER RESEARCH CORPORA11 TIONS.—Such section is further amended by adding 

12 at the end the following new subsection: 

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

14 may act as a multi-medical center research corporation 

15 under this subchapter in accordance with subsection (b) 

16 if— 

17 ‘‘(1) the board of directors of the corporation ap18 proves a resolution permitting facilitation by the cor19 poration of the conduct of research, education, or both 

20 at the other Department medical center or medical 

21 centers concerned; and 

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

23 corporation under paragraph (1).’’. 

24 (b) RESTATEMENT AND MODIFICATION OF AUTHORI25 TIES ON APPLICABILITY OF STATE LAW.— 


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

2 amended by subsection (a) of this section, is further 

3 amended by inserting after subsection (b) the fol4 lowing new subsection (c): 

5 ‘‘(c) Any corporation established under this subchapter 

6 shall be established in accordance with the nonprofit cor7 poration laws of the State in which the applicable Depart8 ment medical center is located and shall, to the extent not 

9 inconsistent with any Federal law, be subject to the laws 

10 of such State. In the case of any multi-medical center re11 search corporation that facilitates the conduct of research, 

12 education, or both at Department medical centers located 

13 in different States, the corporation shall be established in 

14 accordance with the nonprofit corporation laws of the State 

15 in which one of such Department medical centers is lo16 cated.’’. 

17 (2) CONFORMING AMENDMENT.—Section 7365 of 

18 such title is repealed. 

19 (c) CLARIFICATION OF STATUS OF CORPORATIONS.— 

20 Section 7361 of such title, as amended by this section, is 

21 further amended— 

22 (1) in subsection (a), by striking the second sen23 tence; and 

24 (2) by inserting after subsection (c) the following 

25 new subsection (d): 


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1 ‘‘(d)(1) Except as otherwise provided in this sub2 chapter or under regulations prescribed by the Secretary, 

3 any corporation established under this subchapter, and its 

4 officers, directors, and employees, shall be required to com5 ply only with those Federal laws, regulations, and executive 

6 orders and directives that apply generally to private non7 profit corporations. 

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

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

10 or 

11 ‘‘(B) an agency or instrumentality of the United 

12 States.’’. 

13 (d) REINSTATEMENT OF REQUIREMENT FOR 501(C)(3) 

14 STATUS OF CORPORATIONS.—Subsection (e) of section 7361 

15 of such title, as redesignated by subsection (a)(1) of this 

16 section, is further amended by inserting ‘‘section 501(c)(3) 

17 of’’ after ‘‘exempt from taxation under’’. 

18 SEC. 3. CLARIFICATION OF PURPOSES OF CORPORATIONS. 

19 (a) CLARIFICATION OF PURPOSES.—Subsection (a) of 

20 section 7362 of title 38, United States Code, is amended 

21 in the first sentence— 

22 (1) by striking ‘‘Any corporation’’ and all that 

23 follows through ‘‘facilitate’’ and inserting ‘‘A corpora24 tion established under this subchapter shall be estab25 lished to provide a flexible funding mechanism for the 


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1 conduct of approved research and education at one or 

2 more Department medical centers and to facilitate 

3 functions related to the conduct of’’; and 

4 (2) by inserting before the period at the end the 

5 following: ‘‘or centers’’. 

6 (b) MODIFICATION OF DEFINED TERM RELATING TO

7 EDUCATION AND TRAINING.—Subsection (b) of such section 

8 is amended in the matter preceding paragraph (1) by strik9 ing ‘‘the term ‘education and training’ ’’ and inserting ‘‘the 

10 term ‘education’ includes education and training and’’. 

11 (c) REPEAL OF ROLE OF CORPORATIONS WITH RE12 SPECT TO FELLOWSHIPS.—Paragraph (1) of subsection (b) 

13 of such section is amended by striking the flush matter fol14 lowing subparagraph (C). 

15 (d) AVAILABILITY OF EDUCATION FOR FAMILIES OF

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

17 such section is amended by striking ‘‘to patients and to the 

18 families’’ and inserting ‘‘and includes education and train19 ing for patients and families’’. 

20 SEC. 4. MODIFICATION OF REQUIREMENTS FOR BOARDS OF 

21 DIRECTORS OF CORPORATIONS. 

22 (a) REQUIREMENTS FOR DEPARTMENT BOARD MEM23 BERS.—Paragraph (1) of section 7363(a) of title 38, United 

24 States Code, is amended to read as follows: 


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1 ‘‘(1) with respect to the Department medical cen2 ter— 

3 ‘‘(A)(i) the director (or directors of each De4 partment medical center, in the case of a multi5 medical center research corporation); 

6 ‘‘(ii) the chief of staff; and 

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

8 such corporation, the associate chief of staff for 

9 research and the associate chief of staff for edu10 cation; or 

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

12 center at which one or more of the positions re13 ferred to in subparagraph (A) do not exist, the 

14 official or officials who are responsible for car15 rying out the responsibilities of such position or 

16 positions at the Department medical center; 

17 and’’. 

18 (b) REQUIREMENTS FOR NON-DEPARTMENT BOARD

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

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

21 ‘‘members’’; and 

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

23 through the period at the end and inserting ‘‘and who 

24 have backgrounds, or business, legal, financial, medVerDate Nov 24 2008 01:24 Jul 24, 2009 Jkt 079200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6203 E:\BILLS\H2770.RH H2770

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1 ical, or scientific expertise, of benefit to the operations 

2 of the corporation.’’. 

3 (c) CLARIFICATION THAT DEPARTMENT EMPLOYEES

4 MAY SERVE AS EXECUTIVE DIRECTORS.—Subsection (b) of 

5 section 7363 of such title is amended in the first sentence, 

6 by inserting after ‘‘executive director who’’ the following: 

7 ‘‘may be an employee of the Department and who’’. 

8 (d) CONFLICTS OF INTEREST.—Subsection (c) of sec9 tion 7363 of such title is amended by striking ‘‘, employed 

10 by, or have any other financial relationship with’’ and in11 serting ‘‘or employed by’’. 

12 SEC. 5. CLARIFICATION OF POWERS OF CORPORATIONS. 

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

14 States Code, is amended to read as follows: 

15 ‘‘§ 7364. General powers 

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

17 under this subchapter may, solely to carry out the purposes 

18 of this subchapter— 

19 ‘‘(A) accept, administer, retain, and spend funds 

20 derived from gifts, contributions, grants, fees, reim21 bursements, and bequests from individuals and public 

22 and private entities; 

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

24 individuals and public and private entities; 


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1 ‘‘(C) subject to paragraph (2), set fees for edu2 cation and training facilitated under section 7362 of 

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

4 funds in furtherance of such education and training; 

5 ‘‘(D) reimburse amounts to the applicable appro6 priation account of the Department for the Office of 

7 General Counsel for any expenses of that Office in 

8 providing legal services attributable to research and 

9 education agreements under this subchapter; and 

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

11 considers necessary for such purposes and fix the com12 pensation of such employees. 

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

14 education and training described in that paragraph to in15 dividuals who are officers or employees of the Department 

16 may not be paid for by any funds appropriated to the De17 partment. 

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

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

20 by the Office of the General Counsel only for staff and train21 ing, and related travel, for the provision of legal services 

22 described in that paragraph and shall remain available for 

23 such use without fiscal year limitation. 

24 ‘‘(b) TRANSFER AND ADMINISTRATION OF FUNDS.—(1) 

25 Except as provided in paragraph (2), any funds received 


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1 by the Secretary for the conduct of research or education 

2 at a Department medical center or centers, other than funds 

3 appropriated to the Department, may be transferred to and 

4 administered by a corporation established under this sub5 chapter for such purposes. 

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

7 corporation for all or a portion of the pay, benefits, or both 

8 of an employee of the corporation who is assigned to the 

9 Department medical center if the assignment is carried out 

10 pursuant to subchapter VI of chapter 33 of title 5. 

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

12 funds provided to it by a corporation established under this 

13 subchapter. Such funds shall be credited to the applicable 

14 appropriation account of the Department and shall be 

15 available, without fiscal year limitation, for the purposes 

16 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 project 

21 is approved in accordance with procedures prescribed by 

22 the Under Secretary for Health for research carried out 

23 with Department funds. Such procedures shall include a 

24 scientific review process. 


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1 ‘‘(d) EDUCATION ACTIVITIES.—Except for reasonable 

2 and usual preliminary costs for activity planning before 

3 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 to 

9 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 executive 

13 orders, circulars, and directives that apply generally to the 

14 receipt and expenditure of funds by nonprofit organizations 

15 exempt from taxation under section 501(c)(3) of the Inter16 nal 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 fur19 ther 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 such 

24 title. 


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

2 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 Secretary 

13 each year a report providing a detailed statement of the 

14 operations, activities, and accomplishments of the corpora15 tion during that year. 

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

17 $500,000 for any year shall obtain an audit of the corpora18 tion for that year. 

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

20 $100,000 and $500,000 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) CONFLICT OF INTEREST POLICIES.—Subsection (c) 

8 of such section is amended to read as follows: 

9 ‘‘(c) Each director, officer, and employee of a corpora10 tion established under this subchapter shall be subject to a 

11 conflict of interest policy adopted by that corporation.’’. 

12 (c) ESTABLISHMENT OF APPROPRIATE PAYEE RE13 PORTING THRESHOLD.—Subsection (d)(3)(C) of such sec14 tion is amended by striking ‘‘$35,000’’ and inserting 

15 ‘‘$50,000’’. 


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Union Calendar No. 123 

111TH CONGRESS 

1ST SESSION H. R. 2770 

[Report No. 111–225] 

A BILL 

To amend title 38, United States Code, to modify 

other purposes. research and education corporations, and for and update provisions of law relating to nonprofit 

JULY 23, 2009 

Reported with an amendment, committed to the Comand ordered to be printed mittee of the Whole House on the State of the Union, 


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