IIB 

111TH CONGRESS 

1ST SESSION H. R. 2770 

IN THE SENATE OF THE UNITED STATES 

JULY 28, 2009 

Received; read twice and referred to the Committee on Veterans’ Affairs 

AN ACT 

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, 


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1 SECTION 1. SHORT TITLE. 

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

3 Research and Education Corporations Enhancement Act 

4 of 2009’’. 

5 SEC. 2. GENERAL AUTHORITIES ON ESTABLISHMENT OF 

6 CORPORATIONS. 

7 (a) AUTHORIZATION OF MULTI-MEDICAL CENTER

8 RESEARCH CORPORATIONS.— 

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

10 United States Code, is amended— 

11 (A) by redesignating subsection (b) as sub12 section (e); and 

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

14 following new subsection (b): 

15 ‘‘(b)(1) Subject to paragraph (2), a corporation es16 tablished under this subchapter may facilitate the conduct 

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

18 center. Such a corporation shall be known as a ‘multi-med19 ical center research corporation’. 

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

21 research corporation under this subsection shall include 

22 the official at each Department medical center concerned 

23 who is, or who carries out the responsibilities of, the med24 ical center director of such center as specified in section 

25 7363(a)(1)(A)(i) of this title. 


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1 ‘‘(3) In facilitating the conduct of research, edu2 cation, or both at more than one Department medical cen3 ter under this subchapter, a multi-medical center research 

4 corporation may administer receipts and expenditures re5 lating to such research, education, or both, as applicable, 

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

7 (2) EXPANSION OF EXISTING CORPORATIONS TO

8 MULTI-MEDICAL CENTER RESEARCH CORPORA9 TIONS.—Such section is further amended by adding 

10 at the end the following new subsection: 

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

12 may act as a multi-medical center research corporation 

13 under this subchapter in accordance with subsection (b) 

14 if— 

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

16 approves a resolution permitting facilitation by the 

17 corporation of the conduct of research, education, or 

18 both at the other Department medical center or 

19 medical centers concerned; and 

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

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

22 (b) RESTATEMENT AND MODIFICATION OF AUTHORI23 TIES ON APPLICABILITY OF STATE LAW.— 

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

25 as amended by subsection (a) of this section, is furVerDate Nov 24 2008 03:36 Jul 29, 2009 Jkt 079200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H2770.RFS H2770

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1 ther amended by inserting after subsection (b) the 

2 following new subsection (c): 

3 ‘‘(c) Any corporation established under this sub4 chapter shall be established in accordance with the non5 profit corporation laws of the State in which the applicable 

6 Department medical center is located and shall, to the ex7 tent not inconsistent with any Federal law, be subject to 

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

9 center research corporation that facilitates the conduct of 

10 research, education, or both at Department medical cen11 ters located in different States, the corporation shall be 

12 established in accordance with the nonprofit corporation 

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

14 centers is located.’’. 

15 (2) CONFORMING AMENDMENT.—Section 7365 

16 of such title is repealed. 

17 (c) CLARIFICATION OF STATUS OF CORPORATIONS.— 

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

19 is further amended— 

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

21 sentence; and 

22 (2) by inserting after subsection (c) the fol23 lowing new subsection (d): 

24 ‘‘(d)(1) Except as otherwise provided in this sub25 chapter or under regulations prescribed by the Secretary, 


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1 any corporation established under this subchapter, and its 

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

3 comply only with those Federal laws, regulations, and ex4 ecutive orders and directives that apply generally to pri5 vate nonprofit corporations. 

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

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

8 or 

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

10 United States.’’. 

11 (d) REINSTATEMENT OF REQUIREMENT FOR

12 501(C)(3) STATUS OF CORPORATIONS.—Subsection (e) of 

13 section 7361 of such title, as redesignated by subsection 

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

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

16 under’’. 

17 SEC. 3. CLARIFICATION OF PURPOSES OF CORPORATIONS. 

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

19 of section 7362 of title 38, United States Code, is amend20 ed in the first sentence— 

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

22 follows through ‘‘facilitate’’ and inserting ‘‘A cor23 poration established under this subchapter shall be 

24 established to provide a flexible funding mechanism 

25 for the conduct of approved research and education 


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1 at one or more Department medical centers and to 

2 facilitate functions related to the conduct of’’; and 

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

4 following: ‘‘or centers’’. 

5 (b) MODIFICATION OF DEFINED TERM RELATING TO

6 EDUCATION AND TRAINING.—Subsection (b) of such sec7 tion is amended in the matter preceding paragraph (1) 

8 by striking ‘‘the term ‘education and training’ ’’ and in9 serting ‘‘the term ‘education’ includes education and train10 ing and’’. 

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

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

14 following 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 

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

19 training for patients and families’’. 

20 SEC. 4. MODIFICATION OF REQUIREMENTS FOR BOARDS 

21 OF DIRECTORS OF CORPORATIONS. 

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

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


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

2 center— 

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

4 Department medical center, in the case of a 

5 multi-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 

10 education; 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 

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


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1 medical, or scientific expertise, of benefit to the op2 erations of the corporation.’’. 

3 (c) CLARIFICATION THAT DEPARTMENT EMPLOYEES

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

5 of section 7363 of such title is amended in the first sen6 tence, by inserting after ‘‘executive director who’’ the fol7 lowing: ‘‘may be an employee of the Department and 

8 who’’. 

9 (d) CONFLICTS OF INTEREST.—Subsection (c) of sec10 tion 7363 of such title is amended by striking ‘‘, employed 

11 by, or have any other financial relationship with’’ and in12 serting ‘‘or employed by’’. 

13 SEC. 5. CLARIFICATION OF POWERS OF CORPORATIONS. 

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

15 States Code, is amended to read as follows: 

16 ‘‘§ 7364. General powers 

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

18 under this subchapter may, solely to carry out the pur19 poses of this subchapter— 

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

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

22 reimbursements, and bequests from individuals and 

23 public and private entities; 

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

25 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 ap6 propriation account of the Department for the Office 

7 of General Counsel for any expenses of that Office 

8 in providing legal services attributable to research 

9 and education agreements under this subchapter; 

10 and 

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

12 considers necessary for such purposes and fix the 

13 compensation of such employees. 

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

15 education and training described in that paragraph to in16 dividuals who are officers or employees of the Department 

17 may not be paid for by any funds appropriated to the De18 partment. 

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

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

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

22 training, and related travel, for the provision of legal serv23 ices described in that paragraph and shall remain available 

24 for such use without fiscal year limitation. 


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

2 (1) Except as provided in paragraph (2), any funds re3 ceived by the Secretary for the conduct of research or edu4 cation at a Department medical center or centers, other 

5 than funds appropriated to the Department, may be trans6 ferred to and administered by a corporation established 

7 under this subchapter for such purposes. 

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

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

10 both of an employee of the corporation who is assigned 

11 to the Department medical center if the assignment is car12 ried out pursuant to subchapter VI of chapter 33 of title 

13 5. 

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

15 use funds provided to it by a corporation established under 

16 this subchapter. Such funds shall be credited to the appli17 cable appropriation account of the Department and shall 

18 be available, without fiscal year limitation, for the pur19 poses of that account. 

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

21 and usual preliminary costs for project planning before its 

22 approval, a corporation established under this subchapter 

23 may not spend funds for a research project unless the 

24 project is approved in accordance with procedures pre25 scribed by the Under Secretary for Health for research 


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1 carried out with Department funds. Such procedures shall 

2 include a scientific review process. 

3 ‘‘(d) EDUCATION ACTIVITIES.—Except for reason4 able and usual preliminary costs for activity planning be5 fore its approval, a corporation established under this sub6 chapter may not spend funds for an education activity un7 less the activity is approved in accordance with procedures 

8 prescribed by the Under Secretary for Health. 

9 ‘‘(e) POLICIES AND PROCEDURES.—The Under Sec10 retary for Health may prescribe policies and procedures 

11 to guide the spending of funds by corporations established 

12 under this subchapter that are consistent with the purpose 

13 of such corporations as flexible funding mechanisms and 

14 with Federal and State laws and regulations, and execu15 tive orders, circulars, and directives that apply generally 

16 to the receipt and expenditure of funds by nonprofit orga17 nizations exempt from taxation under section 501(c)(3) of 

18 the Internal Revenue Code of 1986.’’. 

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

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

21 further amended by striking the last sentence. 


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

2 UNITED STATES CODE. 

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

4 United States Code, is redesignated as section 7365 of 

5 such title. 

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

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

8 (1) by striking the item relating to section 

9 7364A; and 

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

11 and inserting the following new item: 

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

12 SEC. 7. IMPROVED ACCOUNTABILITY AND OVERSIGHT OF 

13 CORPORATIONS. 

14 (a) ADDITIONAL INFORMATION IN ANNUAL RE15 PORTS.—Subsection (b) of section 7366 of title 38, United 

16 States Code, is amended to read as follows: 

17 ‘‘(b)(1) Each corporation shall submit to the Sec18 retary each year a report providing a detailed statement 

19 of the operations, activities, and accomplishments of the 

20 corporation during that year. 

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

22 $500,000 for any year shall obtain an audit of the cor23 poration for that year. 


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

2 $100,000 and $500,000 shall obtain an audit of the cor3 poration at least once every three years. 

4 ‘‘(C) Any audit under this paragraph shall be per5 formed by an independent auditor. 

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

7 the Secretary under paragraph (1) the following: 

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

9 under paragraph (2). 

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

11 Form 990 ‘Return of Organization Exempt from In12 come Tax’ or equivalent and the applicable schedules 

13 under such form.’’. 

14 (b) CONFLICT OF INTEREST POLICIES.—Subsection 

15 (c) of such section is amended to read as follows: 

16 ‘‘(c) Each director, officer, and employee of a cor17 poration established under this subchapter shall be subject 

18 to a conflict of interest policy adopted by that corpora19 tion.’’. 

20 (c) ESTABLISHMENT OF APPROPRIATE PAYEE RE21 PORTING THRESHOLD.—Subsection (d)(3)(C) of such secVerDate Nov 24 2008 03:36 Jul 29, 2009 Jkt 079200 PO 00000 Frm 00013 Fmt 6652 Sfmt 6201 E:\BILLS\H2770.RFS H2770

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

2 ‘‘$50,000’’. 

Passed the House of Representatives July 27, 2009. 

Attest: LORRAINE C. MILLER, 

Clerk. 


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