108 
shall, upon conviction, be imprisoned not more than 5 
years, be fined under title 18, United States Code, or 
both.’’. 
(b) CEASE ACTIVITIES ORDERS.—Section 502 of 
such Act (29 U.S.C. 1132) is amended by adding at the 
end the following new subsection: 
‘‘(n) ASSOCIATION HEALTH PLAN CEASE AND DE-
SIST ORDERS.— 
‘‘(1) IN GENERAL.—Subject to paragraph (2), 
upon application by the Secretary showing the oper-
ation, promotion, or marketing of an association 
health plan (or similar arrangement providing bene-
fits consisting of medical care (as defined in section 
733(a)(2))) that— 
‘‘(A) is not certified under part 8, is sub-
ject under section 514(b)(6) to the insurance 
laws of any State in which the plan or arrange-
ment offers or provides benefits, and is not li-
censed, registered, or otherwise approved under 
the insurance laws of such State; or 
‘‘(B) is an association health plan certified 
under part 8 and is not operating in accordance 
with the requirements under part 8 for such 
certification, 
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109 
a district court of the United States shall enter an 
order requiring that the plan or arrangement cease 
activities. 
‘‘(2) EXCEPTION.—Paragraph (1) shall not 
apply in the case of an association health plan or 
other arrangement if the plan or arrangement shows 
that— 
‘‘(A) all benefits under it referred to in 
paragraph (1) consist of health insurance cov-
erage; and 
‘‘(B) with respect to each State in which 
the plan or arrangement offers or provides ben-
efits, the plan or arrangement is operating in 
accordance with applicable State laws that are 
not superseded under section 514. 
‘‘(3) ADDITIONAL
EQUITABLE
RELIEF.—The 
court may grant such additional equitable relief, in-
cluding any relief available under this title, as it 
deems necessary to protect the interests of the pub-
lic and of persons having claims for benefits against 
the plan.’’. 
(c) RESPONSIBILITY
FOR CLAIMS PROCEDURE.— 
Section 503 of such Act (29 U.S.C. 1133) is amended by 
inserting ‘‘(a) IN GENERAL.—’’ before ‘‘In accordance’’, 
and by adding at the end the following new subsection: 
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110 
‘‘(b) ASSOCIATION HEALTH PLANS.—The terms of 
each association health plan which is or has been certified 
under part 8 shall require the board of trustees or the 
named fiduciary (as applicable) to ensure that the require-
ments of this section are met in connection with claims 
filed under the plan.’’. 
SEC. 204. COOPERATION BETWEEN FEDERAL AND STATE 
AUTHORITIES. 
Section 506 of the Employee Retirement Income Se-
curity Act of 1974 (29 U.S.C. 1136) is amended by adding 
at the end the following new subsection: 
‘‘(d) CONSULTATION WITH STATES WITH RESPECT 
TO ASSOCIATION HEALTH PLANS.— 
‘‘(1) AGREEMENTS
WITH
STATES.—The Sec-
retary shall consult with the State recognized under 
paragraph (2) with respect to an association health 
plan regarding the exercise of— 
‘‘(A) the Secretary’s authority under sec-
tions 502 and 504 to enforce the requirements 
for certification under part 8; and 
‘‘(B) the Secretary’s authority to certify 
association health plans under part 8 in accord-
ance with regulations of the Secretary applica-
ble to certification under part 8. 
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111 
‘‘(2) RECOGNITION
OF
PRIMARY
DOMICILE 
STATE.—In carrying out paragraph (1), the Sec-
retary shall ensure that only one State will be recog-
nized, with respect to any particular association 
health plan, as the State with which consultation is 
required. In carrying out this paragraph— 
‘‘(A) in the case of a plan which provides 
health insurance coverage (as defined in section 
812(a)(3)), such State shall be the State with 
which filing and approval of a policy type of-
fered by the plan was initially obtained, and 
‘‘(B) in any other case, the Secretary shall 
take into account the places of residence of the 
participants and beneficiaries under the plan 
and the State in which the trust is main-
tained.’’. 
SEC. 205. EFFECTIVE DATE AND TRANSITIONAL AND 
OTHER RULES. 
(a) EFFECTIVE DATE.—The amendments made by 
this title shall take effect 1 year after the date of the en-
actment of this Act. The Secretary of Labor shall first 
issue all regulations necessary to carry out the amend-
ments made by this title within 1 year after the date of 
the enactment of this Act. 
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(b) TREATMENT
OF CERTAIN EXISTING HEALTH 
BENEFITS PROGRAMS.— 
(1) IN GENERAL.—In any case in which, as of 
the date of the enactment of this Act, an arrange-
ment is maintained in a State for the purpose of 
providing benefits consisting of medical care for the 
employees and beneficiaries of its participating em-
ployers, at least 200 participating employers make 
contributions to such arrangement, such arrange-
ment has been in existence for at least 10 years, and 
such arrangement is licensed under the laws of one 
or more States to provide such benefits to its par-
ticipating employers, upon the filing with the appli-
cable authority (as defined in section 812(a)(5) of 
the Employee Retirement Income Security Act of 
1974 (as amended by this subtitle)) by the arrange-
ment of an application for certification of the ar-
rangement under part 8 of subtitle B of title I of 
such Act— 
(A) such arrangement shall be deemed to 
be a group health plan for purposes of title I 
of such Act; 
(B) the requirements of sections 801(a) 
and 803(a) of the Employee Retirement Income 
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Security Act of 1974 shall be deemed met with 
respect to such arrangement; 
(C) the requirements of section 803(b) of 
such Act shall be deemed met, if the arrange-
ment is operated by a board of directors 
which— 
(i) is elected by the participating em-
ployers, with each employer having one 
vote; and 
(ii) has complete fiscal control over 
the arrangement and which is responsible 
for all operations of the arrangement; 
(D) the requirements of section 804(a) of 
such Act shall be deemed met with respect to 
such arrangement; and 
(E) the arrangement may be certified by 
any applicable authority with respect to its op-
erations in any State only if it operates in such 
State on the date of certification. 
The provisions of this subsection shall cease to apply 
with respect to any such arrangement at such time 
after the date of the enactment of this Act as the 
applicable requirements of this subsection are not 
met with respect to such arrangement. 
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114 
(2) DEFINITIONS.—For purposes of this sub-
section, the terms ‘‘group health plan’’, ‘‘medical 
care’’, and ‘‘participating employer’’ shall have the 
meanings provided in section 812 of the Employee 
Retirement Income Security Act of 1974, except 
that the reference in paragraph (7) of such section 
to an ‘‘association health plan’’ shall be deemed a 
reference to an arrangement referred to in this sub-
section. 
TITLE II—TARGETED EFFORTS 
TO EXPAND ACCESS 
SEC. 211. EXTENDING COVERAGE OF DEPENDENTS. 
(a) EMPLOYEE RETIREMENT INCOME SECURITY ACT 
OF 1974.— 
(1) IN GENERAL.—Part 7 of subtitle B of title 
I of the Employee Retirement Income Security Act 
of 1974 is amended by inserting after section 2714 
the following new section: 
‘‘SEC. 715. EXTENDING COVERAGE OF DEPENDENTS. 
‘‘(a) IN GENERAL.—In the case of a group health 
plan, or health insurance coverage offered in connection 
with a group health plan, that treats as a beneficiary 
under the plan an individual who is a dependent child of 
a participant or beneficiary under the plan, the plan or 
coverage shall continue to treat the individual as a depend-
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115 
ent child without regard to the individual’s age through 
at least the end of the plan year in which the individual 
turns an age specified in the plan, but not less than 25 
years of age. 
‘‘(b) CONSTRUCTION.—Nothing in this section shall 
be construed as requiring a group health plan to provide 
benefits for dependent children as beneficiaries under the 
plan or to require a participant to elect coverage of de-
pendent children.’’. 
(2) CLERICAL AMENDMENT.—The table of con-
tents of such Act is amended by inserting after the 
item relating to section 714 the following new item: 
‘‘Sec. 715. Extending coverage of dependents through plan year that includes 
25th birthday.’’. 
(b) PHSA.—Title XXVII of the Public Health Serv-
ice Act is amended by inserting after section 2707 the fol-
lowing new section: 
‘‘SEC. 2708. EXTENDING COVERAGE OF DEPENDENTS. 
‘‘(a) IN GENERAL.—In the case of a group health 
plan, or health insurance coverage offered in connection 
with a group health plan, that treats as a beneficiary 
under the plan an individual who is a dependent child of 
a participant or beneficiary under the plan, the plan or 
coverage shall continue to treat the individual as a depend-
ent child without regard to the individual’s age through 
at least the end of the plan year in which the individual 
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turns an age specified in the plan, but not less than 25 
years of age. 
‘‘(b) CONSTRUCTION.—Nothing in this section shall 
be construed as requiring a group health plan to provide 
benefits for dependent children as beneficiaries under the 
plan or to require a participant to elect coverage of de-
pendent children.’’. 
(c) IRC.— 
(1) IN
GENERAL.—Subchapter B of chapter 
100 of the Internal Revenue Code of 1986 is amend-
ed by adding at the end the following new section: 
‘‘SEC. 9814. EXTENDING COVERAGE OF DEPENDENTS. 
‘‘(a) IN GENERAL.—In the case of a group health 
plan that treats as a beneficiary under the plan an indi-
vidual who is a dependent child of a participant or bene-
ficiary under the plan, the plan shall continue to treat the 
individual as a dependent child without regard to the indi-
vidual’s age through at least the end of the plan year in 
which the individual turns an age specified in the plan, 
but not less than 25 years of age. 
‘‘(b) CONSTRUCTION.—Nothing in this section shall 
be construed as requiring a group health plan to provide 
coverage for dependent children as beneficiaries under the 
plan or to require a participant to elect coverage of de-
pendent children.’’. 
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117 
(2) CLERICAL AMENDMENT.—The table of sec-
tions in such subchapter is amended by adding at 
the end the following new item: 
‘‘Sec. 9814. Extending coverage of dependents through plan year that includes 
25th birthday.’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to group health plans for plan 
years beginning more than 3 months after the date of the 
enactment of this Act and shall apply to individuals who 
are dependent children under a group health plan, or 
health insurance coverage offered in connection with such 
a plan, on or after such date. 
SEC. 212. ALLOWING AUTO-ENROLLMENT FOR EMPLOYER 
SPONSORED COVERAGE. 
(a) IN GENERAL.—No State shall establish a law 
that prevents an employer from instituting auto-enroll-
ment for coverage of a participant or beneficiary, including 
current employees, under a group health plan, or health 
insurance coverage offered in connection with such a plan, 
so long as the participant or beneficiary has the option 
of declining such coverage. 
(b) AUTO-ENROLLMENT.— 
(1) NOTICE REQUIRED.—Employers with auto- 
enrollment under a group health plan or health in-
surance coverage shall provide annual notification, 
within a reasonable period before the beginning of 
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118 
each plan year, to each employee eligible to partici-
pate in the plan. The notice shall explain the em-
ployee contribution to such plan and the employee’s 
right to decline coverage. 
(2) TREATMENT OF NON-ACTION.—After a rea-
sonable period of time after receipt of the notice, if 
an employee fails to make an affirmative declaration 
declining coverage, then such an employee may be 
enrolled in the group health plan or health insurance 
coverage offered in connection with such a plan.’’ 
(c) CONSTRUCTION.—Nothing in this section shall be 
construed to supersede State law which establishes, imple-
ments, or continues in effect any standard or requirement 
relating to employers in connection with payroll or the 
sponsoring of employer sponsored health insurance cov-
erage except to the extent that such standard or require-
ment prevents an employer from instituting the auto-en-
rollment described in subsection (a). 
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119 
TITLE III—EXPANDING CHOICES 
BY ALLOWING AMERICANS TO 
BUY 
HEALTH 
CARE 
COV-
ERAGE ACROSS STATE LINES 
SEC. 221. INTERSTATE PURCHASING OF HEALTH INSUR-
ANCE. 
(a) IN GENERAL.—Title XXVII of the Public Health 
Service Act (42 U.S.C. 300gg et seq.) is amended by add-
ing at the end the following new part: 
‘‘PART D—COOPERATIVE GOVERNING OF 
INDIVIDUAL HEALTH INSURANCE COVERAGE 
‘‘SEC. 2795. DEFINITIONS. 
‘‘In this part: 
‘‘(1) PRIMARY
STATE.—The term ‘primary 
State’ means, with respect to individual health insur-
ance coverage offered by a health insurance issuer, 
the State designated by the issuer as the State 
whose covered laws shall govern the health insurance 
issuer in the sale of such coverage under this part. 
An issuer, with respect to a particular policy, may 
only designate one such State as its primary State 
with respect to all such coverage it offers. Such an 
issuer may not change the designated primary State 
with respect to individual health insurance coverage 
once the policy is issued, except that such a change 
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120 
may be made upon renewal of the policy. With re-
spect to such designated State, the issuer is deemed 
to be doing business in that State. 
‘‘(2) SECONDARY STATE.—The term ‘secondary 
State’ means, with respect to individual health insur-
ance coverage offered by a health insurance issuer, 
any State that is not the primary State. In the case 
of a health insurance issuer that is selling a policy 
in, or to a resident of, a secondary State, the issuer 
is deemed to be doing business in that secondary 
State. 
‘‘(3) HEALTH INSURANCE ISSUER.—The term 
‘health insurance issuer’ has the meaning given such 
term in section 2791(b)(2), except that such an 
issuer must be licensed in the primary State and be 
qualified to sell individual health insurance coverage 
in that State. 
‘‘(4) INDIVIDUAL
HEALTH
INSURANCE
COV-
ERAGE.—The term ‘individual health insurance cov-
erage’ means health insurance coverage offered in 
the individual market, as defined in section 
2791(e)(1). 
‘‘(5) APPLICABLE
STATE
AUTHORITY.—The 
term ‘applicable State authority’ means, with respect 
to a health insurance issuer in a State, the State in-
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surance commissioner or official or officials des-
ignated by the State to enforce the requirements of 
this title for the State with respect to the issuer. 
‘‘(6) HAZARDOUS FINANCIAL CONDITION.—The 
term ‘hazardous financial condition’ means that, 
based on its present or reasonably anticipated finan-
cial condition, a health insurance issuer is unlikely 
to be able— 
‘‘(A) to meet obligations to policyholders 
with respect to known claims and reasonably 
anticipated claims; or 
‘‘(B) to pay other obligations in the normal 
course of business. 
‘‘(7) COVERED LAWS.— 
‘‘(A) IN
GENERAL.—The term ‘covered 
laws’ means the laws, rules, regulations, agree-
ments, and orders governing the insurance busi-
ness pertaining to— 
‘‘(i) individual health insurance cov-
erage issued by a health insurance issuer; 
‘‘(ii) the offer, sale, rating (including 
medical 
underwriting), 
renewal, 
and 
issuance of individual health insurance cov-
erage to an individual; 
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122 
‘‘(iii) the provision to an individual in 
relation to individual health insurance cov-
erage of health care and insurance related 
services; 
‘‘(iv) the provision to an individual in 
relation to individual health insurance cov-
erage of management, operations, and in-
vestment activities of a health insurance 
issuer; and 
‘‘(v) the provision to an individual in 
relation to individual health insurance cov-
erage of loss control and claims adminis-
tration for a health insurance issuer with 
respect to liability for which the issuer pro-
vides insurance. 
‘‘(B) EXCEPTION.—Such term does not in-
clude any law, rule, regulation, agreement, or 
order governing the use of care or cost manage-
ment techniques, including any requirement re-
lated to provider contracting, network access or 
adequacy, health care data collection, or quality 
assurance. 
‘‘(8) STATE.—The term ‘State’ means the 50 
States and includes the District of Columbia, Puerto 
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123 
Rico, the Virgin Islands, Guam, American Samoa, 
and the Northern Mariana Islands. 
‘‘(9) UNFAIR
CLAIMS
SETTLEMENT
PRAC-
TICES.—The term ‘unfair claims settlement prac-
tices’ means only the following practices: 
‘‘(A) Knowingly misrepresenting to claim-
ants and insured individuals relevant facts or 
policy provisions relating to coverage at issue. 
‘‘(B) Failing to acknowledge with reason-
able promptness pertinent communications with 
respect to claims arising under policies. 
‘‘(C) Failing to adopt and implement rea-
sonable standards for the prompt investigation 
and settlement of claims arising under policies. 
‘‘(D) Failing to effectuate prompt, fair, 
and equitable settlement of claims submitted in 
which liability has become reasonably clear. 
‘‘(E) Refusing to pay claims without con-
ducting a reasonable investigation. 
‘‘(F) Failing to affirm or deny coverage of 
claims within a reasonable period of time after 
having completed an investigation related to 
those claims. 
‘‘(G) A pattern or practice of compelling 
insured individuals or their beneficiaries to in-
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124 
stitute suits to recover amounts due under its 
policies by offering substantially less than the 
amounts ultimately recovered in suits brought 
by them. 
‘‘(H) A pattern or practice of attempting 
to settle or settling claims for less than the 
amount that a reasonable person would believe 
the insured individual or his or her beneficiary 
was entitled by reference to written or printed 
advertising material accompanying or made 
part of an application. 
‘‘(I) Attempting to settle or settling claims 
on the basis of an application that was materi-
ally altered without notice to, or knowledge or 
consent of, the insured. 
‘‘(J) Failing to provide forms necessary to 
present claims within 15 calendar days of a re-
quests with reasonable explanations regarding 
their use. 
‘‘(K) Attempting to cancel a policy in less 
time than that prescribed in the policy or by the 
law of the primary State. 
‘‘(10) FRAUD AND ABUSE.—The term ‘fraud 
and abuse’ means an act or omission committed by 
a person who, knowingly and with intent to defraud, 
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commits, or conceals any material information con-
cerning, one or more of the following: 
‘‘(A) Presenting, causing to be presented 
or preparing with knowledge or belief that it 
will be presented to or by an insurer, a rein-
surer, broker or its agent, false information as 
part of, in support of or concerning a fact ma-
terial to one or more of the following: 
‘‘(i) An application for the issuance or 
renewal of an insurance policy or reinsur-
ance contract. 
‘‘(ii) The rating of an insurance policy 
or reinsurance contract. 
‘‘(iii) A claim for payment or benefit 
pursuant to an insurance policy or reinsur-
ance contract. 
‘‘(iv) Premiums paid on an insurance 
policy or reinsurance contract. 
‘‘(v) Payments made in accordance 
with the terms of an insurance policy or 
reinsurance contract. 
‘‘(vi) A document filed with the com-
missioner or the chief insurance regulatory 
official of another jurisdiction. 
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srobinson on DSKHWCL6B1PROD with BILLS
126 
‘‘(vii) The financial condition of an in-
surer or reinsurer. 
‘‘(viii) The formation, acquisition, 
merger, 
reconsolidation, 
dissolution 
or 
withdrawal from one or more lines of in-
surance or reinsurance in all or part of a 
State by an insurer or reinsurer. 
‘‘(ix) The issuance of written evidence 
of insurance. 
‘‘(x) The reinstatement of an insur-
ance policy. 
‘‘(B) Solicitation or acceptance of new or 
renewal insurance risks on behalf of an insurer 
reinsurer or other person engaged in the busi-
ness of insurance by a person who knows or 
should know that the insurer or other person 
responsible for the risk is insolvent at the time 
of the transaction. 
‘‘(C) Transaction of the business of insur-
ance in violation of laws requiring a license, cer-
tificate of authority or other legal authority for 
the transaction of the business of insurance. 
‘‘(D) Attempt to commit, aiding or abet-
ting in the commission of, or conspiracy to com-
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srobinson on DSKHWCL6B1PROD with BILLS
127 
mit the acts or omissions specified in this para-
graph. 
‘‘SEC. 2796. APPLICATION OF LAW. 
‘‘(a) IN GENERAL.—The covered laws of the primary 
State shall apply to individual health insurance coverage 
offered by a health insurance issuer in the primary State 
and in any secondary State, but only if the coverage and 
issuer comply with the conditions of this section with re-
spect to the offering of coverage in any secondary State. 
‘‘(b) EXEMPTIONS FROM COVERED LAWS IN A SEC-
ONDARY STATE.—Except as provided in this section, a 
health insurance issuer with respect to its offer, sale, rat-
ing (including medical underwriting), renewal, and 
issuance of individual health insurance coverage in any 
secondary State is exempt from any covered laws of the 
secondary State (and any rules, regulations, agreements, 
or orders sought or issued by such State under or related 
to such covered laws) to the extent that such laws would— 
‘‘(1) make unlawful, or regulate, directly or in-
directly, the operation of the health insurance issuer 
operating in the secondary State, except that any 
secondary State may require such an issuer— 
‘‘(A) to pay, on a nondiscriminatory basis, 
applicable premium and other taxes (including 
high risk pool assessments) which are levied on 
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128 
insurers and surplus lines insurers, brokers, or 
policyholders under the laws of the State; 
‘‘(B) to register with and designate the 
State insurance commissioner as its agent solely 
for the purpose of receiving service of legal doc-
uments or process; 
‘‘(C) to submit to an examination of its fi-
nancial condition by the State insurance com-
missioner in any State in which the issuer is 
doing business to determine the issuer’s finan-
cial condition, if— 
‘‘(i) the State insurance commissioner 
of the primary State has not done an ex-
amination within the period recommended 
by the National Association of Insurance 
Commissioners; and 
‘‘(ii) any such examination is con-
ducted in accordance with the examiners’ 
handbook of the National Association of 
Insurance Commissioners and is coordi-
nated to avoid unjustified duplication and 
unjustified repetition; 
‘‘(D) to comply with a lawful order 
issued— 
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srobinson on DSKHWCL6B1PROD with BILLS
129 
‘‘(i) in a delinquency proceeding com-
menced by the State insurance commis-
sioner if there has been a finding of finan-
cial impairment under subparagraph (C); 
or 
‘‘(ii) in a voluntary dissolution pro-
ceeding; 
‘‘(E) to comply with an injunction issued 
by a court of competent jurisdiction, upon a pe-
tition by the State insurance commissioner al-
leging that the issuer is in hazardous financial 
condition; 
‘‘(F) to participate, on a nondiscriminatory 
basis, in any insurance insolvency guaranty as-
sociation or similar association to which a 
health insurance issuer in the State is required 
to belong; 
‘‘(G) to comply with any State law regard-
ing fraud and abuse (as defined in section 
2795(10)), except that if the State seeks an in-
junction regarding the conduct described in this 
subparagraph, such injunction must be obtained 
from a court of competent jurisdiction; 
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130 
‘‘(H) to comply with any State law regard-
ing unfair claims settlement practices (as de-
fined in section 2795(9)); or 
‘‘(I) to comply with the applicable require-
ments for independent review under section 
2798 with respect to coverage offered in the 
State; 
‘‘(2) require any individual health insurance 
coverage issued by the issuer to be countersigned by 
an insurance agent or broker residing in that Sec-
ondary State; or 
‘‘(3) otherwise discriminate against the issuer 
issuing insurance in both the primary State and in 
any secondary State. 
‘‘(c) CLEAR
AND CONSPICUOUS DISCLOSURE.—A 
health insurance issuer shall provide the following notice, 
in 12-point bold type, in any insurance coverage offered 
in a secondary State under this part by such a health in-
surance issuer and at renewal of the policy, with the 5 
blank spaces therein being appropriately filled with the 
name of the health insurance issuer, the name of primary 
State, the name of the secondary State, the name of the 
secondary State, and the name of the secondary State, re-
spectively, for the coverage concerned: 
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131 
THIS POLICY IS ISSUED BY lllll AND 
IS GOVERNED BY THE LAWS AND REGULA-
TIONS OF THE STATE OF lllll, AND IT 
HAS MET ALL THE LAWS OF THAT STATE 
AS DETERMINED BY THAT STATE’S DE-
PARTMENT OF INSURANCE. THIS POLICY 
MAY BE LESS EXPENSIVE THAN OTHERS 
BECAUSE IT IS NOT SUBJECT TO ALL OF 
THE INSURANCE LAWS AND REGULATIONS 
OF THE STATE OF lllll, INCLUDING 
COVERAGE OF SOME SERVICES OR BENE-
FITS MANDATED BY THE LAW OF THE 
STATE OF lllll. ADDITIONALLY, THIS 
POLICY IS NOT SUBJECT TO ALL OF THE 
CONSUMER PROTECTION LAWS OR RE-
STRICTIONS ON RATE CHANGES OF THE 
STATE OF lllll. AS WITH ALL INSUR-
ANCE PRODUCTS, BEFORE PURCHASING 
THIS POLICY, YOU SHOULD CAREFULLY 
REVIEW THE POLICY AND DETERMINE 
WHAT HEALTH CARE SERVICES THE POL-
ICY COVERS AND WHAT BENEFITS IT PRO-
VIDES, INCLUDING ANY EXCLUSIONS, LIM-
ITATIONS, OR CONDITIONS FOR SUCH 
SERVICES OR BENEFITS.’’. 
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‘‘(d) PROHIBITION ON CERTAIN RECLASSIFICATIONS 
AND PREMIUM INCREASES.— 
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, a health insurance issuer that provides indi-
vidual health insurance coverage to an individual 
under this part in a primary or secondary State may 
not upon renewal— 
‘‘(A) move or reclassify the individual in-
sured under the health insurance coverage from 
the class such individual is in at the time of 
issue of the contract based on the health-status 
related factors of the individual; or 
‘‘(B) increase the premiums assessed the 
individual for such coverage based on a health 
status-related factor or change of a health sta-
tus-related factor or the past or prospective 
claim experience of the insured individual. 
‘‘(2) CONSTRUCTION.—Nothing in paragraph 
(1) shall be construed to prohibit a health insurance 
issuer— 
‘‘(A) from terminating or discontinuing 
coverage or a class of coverage in accordance 
with subsections (b) and (c) of section 2742; 
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133 
‘‘(B) from raising premium rates for all 
policy holders within a class based on claims ex-
perience; 
‘‘(C) from changing premiums or offering 
discounted premiums to individuals who engage 
in wellness activities at intervals prescribed by 
the issuer, if such premium changes or incen-
tives— 
‘‘(i) are disclosed to the consumer in 
the insurance contract; 
‘‘(ii) are based on specific wellness ac-
tivities that are not applicable to all indi-
viduals; and 
‘‘(iii) are not obtainable by all individ-
uals to whom coverage is offered; 
‘‘(D) from reinstating lapsed coverage; or 
‘‘(E) from retroactively adjusting the rates 
charged an insured individual if the initial rates 
were set based on material misrepresentation by 
the individual at the time of issue. 
‘‘(e) PRIOR OFFERING
OF POLICY
IN PRIMARY 
STATE.—A health insurance issuer may not offer for sale 
individual health insurance coverage in a secondary State 
unless that coverage is currently offered for sale in the 
primary State. 
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‘‘(f) LICENSING
OF AGENTS
OR BROKERS
FOR 
HEALTH INSURANCE ISSUERS.—Any State may require 
that a person acting, or offering to act, as an agent or 
broker for a health insurance issuer with respect to the 
offering of individual health insurance coverage obtain a 
license from that State, with commissions or other com-
pensation subject to the provisions of the laws of that 
State, except that a State may not impose any qualifica-
tion or requirement which discriminates against a non-
resident agent or broker. 
‘‘(g) DOCUMENTS FOR SUBMISSION TO STATE IN-
SURANCE COMMISSIONER.—Each health insurance issuer 
issuing individual health insurance coverage in both pri-
mary and secondary States shall submit— 
‘‘(1) to the insurance commissioner of each 
State in which it intends to offer such coverage, be-
fore it may offer individual health insurance cov-
erage in such State— 
‘‘(A) a copy of the plan of operation or fea-
sibility study or any similar statement of the 
policy being offered and its coverage (which 
shall include the name of its primary State and 
its principal place of business); 
‘‘(B) written notice of any change in its 
designation of its primary State; and 
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‘‘(C) written notice from the issuer of the 
issuer’s compliance with all the laws of the pri-
mary State; and 
‘‘(2) to the insurance commissioner of each sec-
ondary State in which it offers individual health in-
surance coverage, a copy of the issuer’s quarterly fi-
nancial statement submitted to the primary State, 
which statement shall be certified by an independent 
public accountant and contain a statement of opin-
ion on loss and loss adjustment expense reserves 
made by— 
‘‘(A) a member of the American Academy 
of Actuaries; or 
‘‘(B) a qualified loss reserve specialist. 
‘‘(h) POWER OF COURTS TO ENJOIN CONDUCT.— 
Nothing in this section shall be construed to affect the 
authority of any Federal or State court to enjoin— 
‘‘(1) the solicitation or sale of individual health 
insurance coverage by a health insurance issuer to 
any person or group who is not eligible for such in-
surance; or 
‘‘(2) the solicitation or sale of individual health 
insurance coverage that violates the requirements of 
the law of a secondary State which are described in 
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subparagraphs 
(A) 
through 
(H) 
of 
section 
2796(b)(1). 
‘‘(i) POWER OF SECONDARY STATES TO TAKE AD-
MINISTRATIVE ACTION.—Nothing in this section shall be 
construed to affect the authority of any State to enjoin 
conduct in violation of that State’s laws described in sec-
tion 2796(b)(1). 
‘‘(j) STATE POWERS TO ENFORCE STATE LAWS.— 
‘‘(1) IN GENERAL.—Subject to the provisions of 
subsection (b)(1)(G) (relating to injunctions) and 
paragraph (2), nothing in this section shall be con-
strued to affect the authority of any State to make 
use of any of its powers to enforce the laws of such 
State with respect to which a health insurance issuer 
is not exempt under subsection (b). 
‘‘(2) COURTS OF COMPETENT JURISDICTION.— 
If a State seeks an injunction regarding the conduct 
described in paragraphs (1) and (2) of subsection 
(h), such injunction must be obtained from a Fed-
eral or State court of competent jurisdiction. 
‘‘(k) STATES’ AUTHORITY TO SUE.—Nothing in this 
section shall affect the authority of any State to bring ac-
tion in any Federal or State court. 
‘‘(l) GENERALLY APPLICABLE LAWS.—Nothing in 
this section shall be construed to affect the applicability 
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of State laws generally applicable to persons or corpora-
tions. 
‘‘(m) GUARANTEED AVAILABILITY OF COVERAGE TO 
HIPAA ELIGIBLE INDIVIDUALS.—To the extent that a 
health insurance issuer is offering coverage in a primary 
State that does not accommodate residents of secondary 
States or does not provide a working mechanism for resi-
dents of a secondary State, and the issuer is offering cov-
erage under this part in such secondary State which has 
not adopted a qualified high risk pool as its acceptable 
alternative mechanism (as defined in section 2744(c)(2)), 
the issuer shall, with respect to any individual health in-
surance coverage offered in a secondary State under this 
part, comply with the guaranteed availability requirements 
for eligible individuals in section 2741. 
‘‘SEC. 2797. PRIMARY STATE MUST MEET FEDERAL FLOOR 
BEFORE ISSUER MAY SELL INTO SECONDARY 
STATES. 
‘‘A health insurance issuer may not offer, sell, or 
issue individual health insurance coverage in a secondary 
State if the State insurance commissioner does not use 
a risk-based capital formula for the determination of cap-
ital and surplus requirements for all health insurance 
issuers. 
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138 
‘‘SEC. 2798. INDEPENDENT EXTERNAL APPEALS PROCE-
DURES. 
‘‘(a) RIGHT TO EXTERNAL APPEAL.—A health insur-
ance issuer may not offer, sell, or issue individual health 
insurance coverage in a secondary State under the provi-
sions of this title unless— 
‘‘(1) both the secondary State and the primary 
State have legislation or regulations in place estab-
lishing an independent review process for individuals 
who are covered by individual health insurance cov-
erage, or 
‘‘(2) in any case in which the requirements of 
subparagraph (A) are not met with respect to the ei-
ther of such States, the issuer provides an inde-
pendent review mechanism substantially identical (as 
determined by the applicable State authority of such 
State) to that prescribed in the ‘Health Carrier Ex-
ternal Review Model Act’ of the National Association 
of Insurance Commissioners for all individuals who 
purchase insurance coverage under the terms of this 
part, except that, under such mechanism, the review 
is conducted by an independent medical reviewer, or 
a panel of such reviewers, with respect to whom the 
requirements of subsection (b) are met. 
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‘‘(b) QUALIFICATIONS OF INDEPENDENT MEDICAL 
REVIEWERS.—In the case of any independent review 
mechanism referred to in subsection (a)(2)— 
‘‘(1) IN GENERAL.—In referring a denial of a 
claim to an independent medical reviewer, or to any 
panel of such reviewers, to conduct independent 
medical review, the issuer shall ensure that— 
‘‘(A) each independent medical reviewer 
meets the qualifications described in paragraphs 
(2) and (3); 
‘‘(B) with respect to each review, each re-
viewer meets the requirements of paragraph (4) 
and the reviewer, or at least 1 reviewer on the 
panel, meets the requirements described in 
paragraph (5); and 
‘‘(C) compensation provided by the issuer 
to each reviewer is consistent with paragraph 
(6). 
‘‘(2) LICENSURE AND EXPERTISE.—Each inde-
pendent medical reviewer shall be a physician 
(allopathic or osteopathic) or health care profes-
sional who— 
‘‘(A) is appropriately credentialed or li-
censed in 1 or more States to deliver health 
care services; and 
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‘‘(B) typically treats the condition, makes 
the diagnosis, or provides the type of treatment 
under review. 
‘‘(3) INDEPENDENCE.— 
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (B), each independent medical reviewer 
in a case shall— 
‘‘(i) not be a related party (as defined 
in paragraph (7)); 
‘‘(ii) not have a material familial, fi-
nancial, or professional relationship with 
such a party; and 
‘‘(iii) not otherwise have a conflict of 
interest with such a party (as determined 
under regulations). 
‘‘(B) EXCEPTION.—Nothing in subpara-
graph (A) shall be construed to— 
‘‘(i) prohibit an individual, solely on 
the basis of affiliation with the issuer, 
from serving as an independent medical re-
viewer if— 
‘‘(I) a non-affiliated individual is 
not reasonably available; 
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141 
‘‘(II) the affiliated individual is 
not involved in the provision of items 
or services in the case under review; 
‘‘(III) the fact of such an affili-
ation is disclosed to the issuer and the 
enrollee (or authorized representative) 
and neither party objects; and 
‘‘(IV) the affiliated individual is 
not an employee of the issuer and 
does not provide services exclusively or 
primarily to or on behalf of the issuer; 
‘‘(ii) prohibit an individual who has 
staff privileges at the institution where the 
treatment involved takes place from serv-
ing as an independent medical reviewer 
merely on the basis of such affiliation if 
the affiliation is disclosed to the issuer and 
the enrollee (or authorized representative), 
and neither party objects; or 
‘‘(iii) prohibit receipt of compensation 
by an independent medical reviewer from 
an entity if the compensation is provided 
consistent with paragraph (6). 
‘‘(4) PRACTICING HEALTH CARE PROFESSIONAL 
IN SAME FIELD.— 
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‘‘(A) IN
GENERAL.—In a case involving 
treatment, or the provision of items or serv-
ices— 
‘‘(i) by a physician, a reviewer shall be 
a practicing physician (allopathic or osteo-
pathic) of the same or similar specialty, as 
a physician who, acting within the appro-
priate scope of practice within the State in 
which the service is provided or rendered, 
typically treats the condition, makes the 
diagnosis, or provides the type of treat-
ment under review; or 
‘‘(ii) by a non-physician health care 
professional, the reviewer, or at least 1 
member of the review panel, shall be a 
practicing non-physician health care pro-
fessional of the same or similar specialty 
as the non-physician health care profes-
sional who, acting within the appropriate 
scope of practice within the State in which 
the service is provided or rendered, typi-
cally treats the condition, makes the diag-
nosis, or provides the type of treatment 
under review. 
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‘‘(B) PRACTICING
DEFINED.—For pur-
poses of this paragraph, the term ‘practicing’ 
means, with respect to an individual who is a 
physician or other health care professional, that 
the individual provides health care services to 
individual patients on average at least 2 days 
per week. 
‘‘(5) PEDIATRIC EXPERTISE.—In the case of an 
external review relating to a child, a reviewer shall 
have expertise under paragraph (2) in pediatrics. 
‘‘(6) LIMITATIONS
ON
REVIEWER
COMPENSA-
TION.—Compensation provided by the issuer to an 
independent medical reviewer in connection with a 
review under this section shall— 
‘‘(A) not exceed a reasonable level; and 
‘‘(B) not be contingent on the decision ren-
dered by the reviewer. 
‘‘(7) RELATED PARTY DEFINED.—For purposes 
of this section, the term ‘related party’ means, with 
respect to a denial of a claim under a coverage relat-
ing to an enrollee, any of the following: 
‘‘(A) The issuer involved, or any fiduciary, 
officer, director, or employee of the issuer. 
‘‘(B) The enrollee (or authorized represent-
ative). 
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‘‘(C) The health care professional that pro-
vides the items or services involved in the de-
nial. 
‘‘(D) The institution at which the items or 
services (or treatment) involved in the denial 
are provided. 
‘‘(E) The manufacturer of any drug or 
other item that is included in the items or serv-
ices involved in the denial. 
‘‘(F) Any other party determined under 
any regulations to have a substantial interest in 
the denial involved. 
‘‘(8) DEFINITIONS.—For purposes of this sub-
section: 
‘‘(A) ENROLLEE.—The term ‘enrollee’ 
means, with respect to health insurance cov-
erage offered by a health insurance issuer, an 
individual enrolled with the issuer to receive 
such coverage. 
‘‘(B) HEALTH CARE PROFESSIONAL.—The 
term ‘health care professional’ means an indi-
vidual who is licensed, accredited, or certified 
under State law to provide specified health care 
services and who is operating within the scope 
of such licensure, accreditation, or certification. 
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145 
‘‘SEC. 2799. ENFORCEMENT. 
‘‘(a) IN GENERAL.—Subject to subsection (b), with 
respect to specific individual health insurance coverage the 
primary State for such coverage has sole jurisdiction to 
enforce the primary State’s covered laws in the primary 
State and any secondary State. 
‘‘(b) SECONDARY STATE’S AUTHORITY.—Nothing in 
subsection (a) shall be construed to affect the authority 
of a secondary State to enforce its laws as set forth in 
the exception specified in section 2796(b)(1). 
‘‘(c) COURT INTERPRETATION.—In reviewing action 
initiated by the applicable secondary State authority, the 
court of competent jurisdiction shall apply the covered 
laws of the primary State. 
‘‘(d) NOTICE OF COMPLIANCE FAILURE.—In the case 
of individual health insurance coverage offered in a sec-
ondary State that fails to comply with the covered laws 
of the primary State, the applicable State authority of the 
secondary State may notify the applicable State authority 
of the primary State.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall apply to individual health insurance 
coverage offered, issued, or sold after the date that is one 
year after the date of the enactment of this Act. 
(c) GAO ONGOING STUDY AND REPORTS.— 
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146 
(1) STUDY.—The Comptroller General of the 
United States shall conduct an ongoing study con-
cerning the effect of the amendment made by sub-
section (a) on— 
(A) the number of uninsured and under-in-
sured; 
(B) the availability and cost of health in-
surance policies for individuals with preexisting 
medical conditions; 
(C) the availability and cost of health in-
surance policies generally; 
(D) the elimination or reduction of dif-
ferent types of benefits under health insurance 
policies offered in different States; and 
(E) cases of fraud or abuse relating to 
health insurance coverage offered under such 
amendment and the resolution of such cases. 
(2) ANNUAL REPORTS.—The Comptroller Gen-
eral shall submit to Congress an annual report, after 
the end of each of the 5 years following the effective 
date of the amendment made by subsection (a), on 
the ongoing study conducted under paragraph (1). 
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147 
TITLE IV—IMPROVING HEALTH 
SAVINGS ACCOUNTS 
SEC. 
231. 
SAVER’S 
CREDIT 
FOR 
CONTRIBUTIONS 
TO 
HEALTH SAVINGS ACCOUNTS. 
(a) ALLOWANCE OF CREDIT.—Subsection (a) of sec-
tion 25B of the Internal Revenue Code of 1986 is amend-
ed by inserting ‘‘aggregate qualified HSA contributions 
and’’ after ‘‘so much of the’’. 
(b) QUALIFIED HSA CONTRIBUTIONS.—Subsection 
(d) of section 25B of such Code is amended by redesig-
nating paragraph (2) as paragraph (3) and by inserting 
after paragraph (1) the following new paragraph: 
‘‘(2) QUALIFIED
HSA
CONTRIBUTIONS.—The 
term ‘qualified HSA contribution’ means, with re-
spect to any taxable year, a contribution of the eligi-
ble individual to a health savings account (as defined 
in section 223(d)(1)) for which a deduction is allow-
able under section 223(a) for such taxable year.’’. 
(c) CONFORMING AMENDMENT.—The first sentence 
of section 25B(d)(3)(A) of such Code (as redesignated by 
subsection (b)) is amended to read as follows: ‘‘The aggre-
gate qualified retirement savings contributions determined 
under paragraph (1) and qualified HSA contributions de-
termined under paragraph (2) shall be reduced (but not 
below zero) by the aggregate distributions received by the 
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148 
individual during the testing period from any entity of a 
type to which contributions under paragraph (1) or para-
graph (2) (as the case may be) may be made.’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to contributions made after De-
cember 31, 2009. 
SEC. 232. HSA FUNDS FOR PREMIUMS FOR HIGH DEDUCT-
IBLE HEALTH PLANS. 
(a) IN GENERAL.—Subparagraph (C) of section 
223(d)(2) of the Internal Revenue Code of 1986 is amend-
ed by striking ‘‘or’’ at the end of clause (iii), by striking 
the period at the end of clause (iv) and inserting ‘‘, or’’, 
and by adding at the end the following: 
‘‘(v) a high deductible health plan if— 
‘‘(I) such plan is not offered in 
connection with a group health plan, 
‘‘(II) no portion of any premium 
(within the meaning of applicable pre-
mium under section 4980B(f)(4)) for 
such plan is excludable from gross in-
come under section 106, and 
‘‘(III) the account beneficiary 
demonstrates, 
using 
procedures 
deemed appropriate by the Secretary, 
that after payment of the premium 
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149 
for such insurance the balance in the 
health savings account is at least 
twice the minimum deductible in ef-
fect 
under 
subsection 
(c)(2)(A)(i) 
which is applicable to such plan.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall apply to premiums for a high deduct-
ible health plan for periods beginning after December 31, 
2009. 
SEC. 233. REQUIRING GREATER COORDINATION BETWEEN 
HDHP ADMINISTRATORS AND HSA ACCOUNT 
ADMINISTRATORS SO THAT ENROLLEES CAN 
ENROLL IN BOTH AT THE SAME TIME. 
The Secretary of the Treasury, through the issuance 
of regulations or other guidance, shall encourage adminis-
trators of health plans and trustees of health savings ac-
counts to provide for simultaneous enrollment in high de-
ductible health plans and setup of health savings accounts. 
SEC. 234. SPECIAL RULE FOR CERTAIN MEDICAL EXPENSES 
INCURRED BEFORE ESTABLISHMENT OF AC-
COUNT. 
(a) IN GENERAL.—Subsection (d) of section 223 of 
the Internal Revenue Code of 1986 is amended by redesig-
nating paragraph (4) as paragraph (5) and by inserting 
after paragraph (3) the following new paragraph: 
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‘‘(4) CERTAIN MEDICAL EXPENSES INCURRED 
BEFORE ESTABLISHMENT OF ACCOUNT TREATED AS 
QUALIFIED.— 
‘‘(A) IN GENERAL.—For purposes of para-
graph (2), an expense shall not fail to be treat-
ed as a qualified medical expense solely because 
such expense was incurred before the establish-
ment of the health savings account if such ex-
pense was incurred during the 60-day period 
beginning on the date on which the high de-
ductible health plan is first effective. 
‘‘(B) SPECIAL
RULES.—For purposes of 
subparagraph (A)— 
‘‘(i) an individual shall be treated as 
an eligible individual for any portion of a 
month for which the individual is described 
in subsection (c)(1), determined without 
regard to whether the individual is covered 
under a high deductible health plan on the 
1st day of such month, and 
‘‘(ii) the effective date of the health 
savings account is deemed to be the date 
on which the high deductible health plan is 
first effective after the date of the enact-
ment of this paragraph.’’. 
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(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply with respect to insurance pur-
chased after the date of the enactment of this Act in tax-
able years beginning after such date. 
DIVISION C—ENACTING REAL 
MEDICAL LIABILITY REFORM 
SEC. 301. ENCOURAGING SPEEDY RESOLUTION OF CLAIMS. 
The time for the commencement of a health care law-
suit shall be 3 years after the date of manifestation of 
injury or 1 year after the claimant discovers, or through 
the use of reasonable diligence should have discovered, the 
injury, whichever occurs first. In no event shall the time 
for commencement of a health care lawsuit exceed 3 years 
after the date of manifestation of injury unless tolled for 
any of the following— 
(1) upon proof of fraud; 
(2) intentional concealment; or 
(3) the presence of a foreign body, which has no 
therapeutic or diagnostic purpose or effect, in the 
person of the injured person. 
Actions by a minor shall be commenced within 3 years 
from the date of the alleged manifestation of injury except 
that actions by a minor under the full age of 6 years shall 
be commenced within 3 years of manifestation of injury 
or prior to the minor’s 8th birthday, whichever provides 
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a longer period. Such time limitation shall be tolled for 
minors for any period during which a parent or guardian 
and a health care provider or health care organization 
have committed fraud or collusion in the failure to bring 
an action on behalf of the injured minor. 
SEC. 302. COMPENSATING PATIENT INJURY. 
(a) UNLIMITED AMOUNT OF DAMAGES FOR ACTUAL 
ECONOMIC LOSSES IN HEALTH CARE LAWSUITS.—In any 
health care lawsuit, nothing in this title shall limit a claim-
ant’s recovery of the full amount of the available economic 
damages, notwithstanding the limitation in subsection (b). 
(b) ADDITIONAL NONECONOMIC DAMAGES.—In any 
health care lawsuit, the amount of noneconomic damages, 
if available, may be as much as $250,000, regardless of 
the number of parties against whom the action is brought 
or the number of separate claims or actions brought with 
respect to the same injury. 
(c) NO DISCOUNT OF AWARD FOR NONECONOMIC 
DAMAGES.—For purposes of applying the limitation in 
subsection (b), future noneconomic damages shall not be 
discounted to present value. The jury shall not be in-
formed about the maximum award for noneconomic dam-
ages. An award for noneconomic damages in excess of 
$250,000 shall be reduced either before the entry of judg-
ment, or by amendment of the judgment after entry of 
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judgment, and such reduction shall be made before ac-
counting for any other reduction in damages required by 
law. If separate awards are rendered for past and future 
noneconomic damages and the combined awards exceed 
$250,000, the future noneconomic damages shall be re-
duced first. 
(d) FAIR SHARE RULE.—In any health care lawsuit, 
each party shall be liable for that party’s several share 
of any damages only and not for the share of any other 
person. Each party shall be liable only for the amount of 
damages allocated to such party in direct proportion to 
such party’s percentage of responsibility. Whenever a 
judgment of liability is rendered as to any party, a sepa-
rate judgment shall be rendered against each such party 
for the amount allocated to such party. For purposes of 
this section, the trier of fact shall determine the propor-
tion of responsibility of each party for the claimant’s 
harm. 
SEC. 303. MAXIMIZING PATIENT RECOVERY. 
(a) COURT SUPERVISION OF SHARE OF DAMAGES 
ACTUALLY PAID TO CLAIMANTS.—In any health care law-
suit, the court shall supervise the arrangements for pay-
ment of damages to protect against conflicts of interest 
that may have the effect of reducing the amount of dam-
ages awarded that are actually paid to claimants. In par-
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ticular, in any health care lawsuit in which the attorney 
for a party claims a financial stake in the outcome by vir-
tue of a contingent fee, the court shall have the power 
to restrict the payment of a claimant’s damage recovery 
to such attorney, and to redirect such damages to the 
claimant based upon the interests of justice and principles 
of equity. In no event shall the total of all contingent fees 
for representing all claimants in a health care lawsuit ex-
ceed the following limits: 
(1) 40 percent of the first $50,000 recovered by 
the claimant(s). 
(2) 331⁄3 percent of the next $50,000 recovered 
by the claimant(s). 
(3) 25 percent of the next $500,000 recovered 
by the claimant(s). 
(4) 15 percent of any amount by which the re-
covery by the claimant(s) is in excess of $600,000. 
(b) APPLICABILITY.—The limitations in this section 
shall apply whether the recovery is by judgment, settle-
ment, mediation, arbitration, or any other form of alter-
native dispute resolution. In a health care lawsuit involv-
ing a minor or incompetent person, a court retains the 
authority to authorize or approve a fee that is less than 
the maximum permitted under this section. The require-
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ment for court supervision in the first two sentences of 
subsection (a) applies only in civil actions. 
SEC. 304. ADDITIONAL HEALTH BENEFITS. 
In any health care lawsuit involving injury or wrong-
ful death, any party may introduce evidence of collateral 
source benefits. If a party elects to introduce such evi-
dence, any opposing party may introduce evidence of any 
amount paid or contributed or reasonably likely to be paid 
or contributed in the future by or on behalf of the oppos-
ing party to secure the right to such collateral source bene-
fits. No provider of collateral source benefits shall recover 
any amount against the claimant or receive any lien or 
credit against the claimant’s recovery or be equitably or 
legally subrogated to the right of the claimant in a health 
care lawsuit involving injury or wrongful death. This sec-
tion shall apply to any health care lawsuit that is settled 
as well as a health care lawsuit that is resolved by a fact 
finder. This section shall not apply to section 1862(b) (42 
U.S.C. 1395y(b)) or section 1902(a)(25) (42 U.S.C. 
1396a(a)(25)) of the Social Security Act. 
SEC. 305. PUNITIVE DAMAGES. 
(a) IN GENERAL.—Punitive damages may, if other-
wise permitted by applicable State or Federal law, be 
awarded against any person in a health care lawsuit only 
if it is proven by clear and convincing evidence that such 
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person acted with malicious intent to injure the claimant, 
or that such person deliberately failed to avoid unneces-
sary injury that such person knew the claimant was sub-
stantially certain to suffer. In any health care lawsuit 
where no judgment for compensatory damages is rendered 
against such person, no punitive damages may be awarded 
with respect to the claim in such lawsuit. No demand for 
punitive damages shall be included in a health care lawsuit 
as initially filed. A court may allow a claimant to file an 
amended pleading for punitive damages only upon a mo-
tion by the claimant and after a finding by the court, upon 
review of supporting and opposing affidavits or after a 
hearing, after weighing the evidence, that the claimant has 
established by a substantial probability that the claimant 
will prevail on the claim for punitive damages. At the re-
quest of any party in a health care lawsuit, the trier of 
fact shall consider in a separate proceeding— 
(1) whether punitive damages are to be award-
ed and the amount of such award; and 
(2) the amount of punitive damages following a 
determination of punitive liability. 
If a separate proceeding is requested, evidence relevant 
only to the claim for punitive damages, as determined by 
applicable State law, shall be inadmissible in any pro-
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ceeding to determine whether compensatory damages are 
to be awarded. 
(b) DETERMINING AMOUNT
OF PUNITIVE DAM-
AGES.— 
(1) FACTORS
CONSIDERED.—In determining 
the amount of punitive damages, if awarded, in a 
health care lawsuit, the trier of fact shall consider 
only the following— 
(A) the severity of the harm caused by the 
conduct of such party; 
(B) the duration of the conduct or any 
concealment of it by such party; 
(C) the profitability of the conduct to such 
party; 
(D) the number of products sold or med-
ical procedures rendered for compensation, as 
the case may be, by such party, of the kind 
causing the harm complained of by the claim-
ant; 
(E) any criminal penalties imposed on such 
party, as a result of the conduct complained of 
by the claimant; and 
(F) the amount of any civil fines assessed 
against such party as a result of the conduct 
complained of by the claimant. 
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(2) MAXIMUM AWARD.—The amount of punitive 
damages, if awarded, in a health care lawsuit may 
be as much as $250,000 or as much as two times 
the amount of economic damages awarded, which-
ever is greater. The jury shall not be informed of 
this limitation. 
SEC. 306. AUTHORIZATION OF PAYMENT OF FUTURE DAM-
AGES TO CLAIMANTS IN HEALTH CARE LAW-
SUITS. 
(a) IN GENERAL.—In any health care lawsuit, if an 
award of future damages, without reduction to present 
value, equaling or exceeding $50,000 is made against a 
party with sufficient insurance or other assets to fund a 
periodic payment of such a judgment, the court shall, at 
the request of any party, enter a judgment ordering that 
the future damages be paid by periodic payments. In any 
health care lawsuit, the court may be guided by the Uni-
form Periodic Payment of Judgments Act promulgated by 
the National Conference of Commissioners on Uniform 
State Laws. 
(b) APPLICABILITY.—This section applies to all ac-
tions which have not been first set for trial or retrial be-
fore the effective date of this title. 
SEC. 307. DEFINITIONS. 
In this title: 
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(1) ALTERNATIVE DISPUTE RESOLUTION SYS-
TEM; ADR.—The term ‘‘alternative dispute resolution 
system’’ or ‘‘ADR’’ means a system that provides 
for the resolution of health care lawsuits in a man-
ner other than through a civil action brought in a 
State or Federal court. 
(2) CLAIMANT.—The term ‘‘claimant’’ means 
any person who brings a health care lawsuit, includ-
ing a person who asserts or claims a right to legal 
or equitable contribution, indemnity, or subrogation, 
arising out of a health care liability claim or action, 
and any person on whose behalf such a claim is as-
serted or such an action is brought, whether de-
ceased, incompetent, or a minor. 
(3) COLLATERAL
SOURCE
BENEFITS.—The 
term ‘‘collateral source benefits’’ means any amount 
paid or reasonably likely to be paid in the future to 
or on behalf of the claimant, or any service, product, 
or other benefit provided or reasonably likely to be 
provided in the future to or on behalf of the claim-
ant, as a result of the injury or wrongful death, pur-
suant to— 
(A) any State or Federal health, sickness, 
income-disability, accident, or workers’ com-
pensation law; 
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(B) any health, sickness, income-disability, 
or accident insurance that provides health bene-
fits or income-disability coverage; 
(C) any contract or agreement of any 
group, organization, partnership, or corporation 
to provide, pay for, or reimburse the cost of 
medical, hospital, dental, or income-disability 
benefits; and 
(D) any other publicly or privately funded 
program. 
(4) 
COMPENSATORY
DAMAGES.—The 
term 
‘‘compensatory 
damages’’ 
means 
objectively 
verifiable monetary losses incurred as a result of the 
provision of, use of, or payment for (or failure to 
provide, use, or pay for) health care services or med-
ical products, such as past and future medical ex-
penses, loss of past and future earnings, cost of ob-
taining domestic services, loss of employment, and 
loss of business or employment opportunities, dam-
ages for physical and emotional pain, suffering, in-
convenience, physical impairment, mental anguish, 
disfigurement, loss of enjoyment of life, loss of soci-
ety and companionship, loss of consortium (other 
than loss of domestic service), hedonic damages, in-
jury to reputation, and all other nonpecuniary losses 
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of any kind or nature. The term ‘‘compensatory 
damages’’ includes economic damages and non-
economic damages, as such terms are defined in this 
section. 
(5) CONTINGENT FEE.—The term ‘‘contingent 
fee’’ includes all compensation to any person or per-
sons which is payable only if a recovery is effected 
on behalf of one or more claimants. 
(6) ECONOMIC DAMAGES.—The term ‘‘economic 
damages’’ means objectively verifiable monetary 
losses incurred as a result of the provision of, use 
of, or payment for (or failure to provide, use, or pay 
for) health care services or medical products, such as 
past and future medical expenses, loss of past and 
future earnings, cost of obtaining domestic services, 
loss of employment, and loss of business or employ-
ment opportunities. 
(7) 
HEALTH
CARE
LAWSUIT.—The 
term 
‘‘health care lawsuit’’ means any health care liability 
claim concerning the provision of health care goods 
or services or any medical product affecting inter-
state commerce, or any health care liability action 
concerning the provision of health care goods or 
services or any medical product affecting interstate 
commerce, brought in a State or Federal court or 
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pursuant to an alternative dispute resolution system, 
against a health care provider, a health care organi-
zation, or the manufacturer, distributor, supplier, 
marketer, promoter, or seller of a medical product, 
regardless of the theory of liability on which the 
claim is based, or the number of claimants, plain-
tiffs, defendants, or other parties, or the number of 
claims or causes of action, in which the claimant al-
leges a health care liability claim. Such term does 
not include a claim or action which is based on 
criminal liability; which seeks civil fines or penalties 
paid to Federal, State, or local government; or which 
is grounded in antitrust. 
(8) HEALTH
CARE
LIABILITY
ACTION.—The 
term ‘‘health care liability action’’ means a civil ac-
tion brought in a State or Federal court or pursuant 
to an alternative dispute resolution system, against 
a health care provider, a health care organization, or 
the manufacturer, distributor, supplier, marketer, 
promoter, or seller of a medical product, regardless 
of the theory of liability on which the claim is based, 
or the number of plaintiffs, defendants, or other par-
ties, or the number of causes of action, in which the 
claimant alleges a health care liability claim. 
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(9) HEALTH
CARE
LIABILITY
CLAIM.—The 
term ‘‘health care liability claim’’ means a demand 
by any person, whether or not pursuant to ADR, 
against a health care provider, health care organiza-
tion, or the manufacturer, distributor, supplier, mar-
keter, promoter, or seller of a medical product, in-
cluding, but not limited to, third-party claims, cross- 
claims, counter-claims, or contribution claims, which 
are based upon the provision of, use of, or payment 
for (or the failure to provide, use, or pay for) health 
care services or medical products, regardless of the 
theory of liability on which the claim is based, or the 
number of plaintiffs, defendants, or other parties, or 
the number of causes of action. 
(10) HEALTH CARE ORGANIZATION.—The term 
‘‘health care organization’’ means any person or en-
tity which is obligated to provide or pay for health 
benefits under any health plan, including any person 
or entity acting under a contract or arrangement 
with a health care organization to provide or admin-
ister any health benefit. 
(11) HEALTH
CARE
PROVIDER.—The term 
‘‘health care provider’’ means any person or entity 
required by State or Federal laws or regulations to 
be licensed, registered, or certified to provide health 
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care services, and being either so licensed, reg-
istered, or certified, or exempted from such require-
ment by other statute or regulation. 
(12) HEALTH CARE GOODS OR SERVICES.—The 
term ‘‘health care goods or services’’ means any 
goods or services provided by a health care organiza-
tion, provider, or by any individual working under 
the supervision of a health care provider, that relates 
to the diagnosis, prevention, or treatment of any 
human disease or impairment, or the assessment or 
care of the health of human beings. 
(13) MALICIOUS
INTENT
TO
INJURE.—The 
term ‘‘malicious intent to injure’’ means inten-
tionally causing or attempting to cause physical in-
jury other than providing health care goods or serv-
ices. 
(14) MEDICAL PRODUCT.—The term ‘‘medical 
product’’ means a drug, device, or biological product 
intended for humans, and the terms ‘‘drug’’, ‘‘de-
vice’’, and ‘‘biological product’’ have the meanings 
given such terms in sections 201(g)(1) and 201(h) 
of the Federal Food, Drug and Cosmetic Act (21 
U.S.C. 321(g)(1) and (h)) and section 351(a) of the 
Public Health Service Act (42 U.S.C. 262(a)), re-
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spectively, including any component or raw material 
used therein, but excluding health care services. 
(15) 
NONECONOMIC
DAMAGES.—The 
term 
‘‘noneconomic damages’’ means damages for phys-
ical and emotional pain, suffering, inconvenience, 
physical impairment, mental anguish, disfigurement, 
loss of enjoyment of life, loss of society and compan-
ionship, loss of consortium (other than loss of do-
mestic service), hedonic damages, injury to reputa-
tion, and all other nonpecuniary losses of any kind 
or nature. 
(16) PUNITIVE DAMAGES.—The term ‘‘punitive 
damages’’ means damages awarded, for the purpose 
of punishment or deterrence, and not solely for com-
pensatory purposes, against a health care provider, 
health care organization, or a manufacturer, dis-
tributor, or supplier of a medical product. Punitive 
damages are neither economic nor noneconomic 
damages. 
(17) RECOVERY.—The term ‘‘recovery’’ means 
the net sum recovered after deducting any disburse-
ments or costs incurred in connection with prosecu-
tion or settlement of the claim, including all costs 
paid or advanced by any person. Costs of health care 
incurred by the plaintiff and the attorneys’ office 
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overhead costs or charges for legal services are not 
deductible disbursements or costs for such purpose. 
(18) STATE.—The term ‘‘State’’ means each of 
the several States, the District of Columbia, the 
Commonwealth of Puerto Rico, the Virgin Islands, 
Guam, American Samoa, the Northern Mariana Is-
lands, the Trust Territory of the Pacific Islands, and 
any other territory or possession of the United 
States, or any political subdivision thereof. 
SEC. 308. EFFECT ON OTHER LAWS. 
(a) VACCINE INJURY.— 
(1) To the extent that title XXI of the Public 
Health Service Act establishes a Federal rule of law 
applicable to a civil action brought for a vaccine-re-
lated injury or death— 
(A) this title does not affect the application 
of the rule of law to such an action; and 
(B) any rule of law prescribed by this title 
in conflict with a rule of law of such title XXI 
shall not apply to such action. 
(2) If there is an aspect of a civil action 
brought for a vaccine-related injury or death to 
which a Federal rule of law under title XXI of the 
Public Health Service Act does not apply, then this 
title or otherwise applicable law (as determined 
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under this title) will apply to such aspect of such ac-
tion. 
(b) OTHER FEDERAL LAW.—Except as provided in 
this section, nothing in this title shall be deemed to affect 
any defense available to a defendant in a health care law-
suit or action under any other provision of Federal law. 
SEC. 
309. 
STATE 
FLEXIBILITY 
AND 
PROTECTION 
OF 
STATES’ RIGHTS. 
(a) HEALTH CARE LAWSUITS.—The provisions gov-
erning health care lawsuits set forth in this title preempt, 
subject to subsections (b) and (c), State law to the extent 
that State law prevents the application of any provisions 
of law established by or under this title. The provisions 
governing health care lawsuits set forth in this title super-
sede chapter 171 of title 28, United States Code, to the 
extent that such chapter— 
(1) provides for a greater amount of damages 
or contingent fees, a longer period in which a health 
care lawsuit may be commenced, or a reduced appli-
cability or scope of periodic payment of future dam-
ages, than provided in this title; or 
(2) prohibits the introduction of evidence re-
garding collateral source benefits, or mandates or 
permits subrogation or a lien on collateral source 
benefits. 
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(b) PROTECTION OF STATES’ RIGHTS AND OTHER 
LAWS.—(1) Any issue that is not governed by any provi-
sion of law established by or under this title (including 
State standards of negligence) shall be governed by other-
wise applicable State or Federal law. 
(2) This title shall not preempt or supersede any 
State or Federal law that imposes greater procedural or 
substantive protections for health care providers and 
health care organizations from liability, loss, or damages 
than those provided by this title or create a cause of ac-
tion. 
(c) STATE FLEXIBILITY.—No provision of this title 
shall be construed to preempt— 
(1) any State law (whether effective before, on, 
or after the date of the enactment of this Act) that 
specifies a particular monetary amount of compen-
satory or punitive damages (or the total amount of 
damages) that may be awarded in a health care law-
suit, regardless of whether such monetary amount is 
greater or lesser than is provided for under this title, 
notwithstanding section 302(a); or 
(2) any defense available to a party in a health 
care lawsuit under any other provision of State or 
Federal law. 
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SEC. 310. APPLICABILITY; EFFECTIVE DATE. 
This title shall apply to any health care lawsuit 
brought in a Federal or State court, or subject to an alter-
native dispute resolution system, that is initiated on or 
after the date of the enactment of this Act, except that 
any health care lawsuit arising from an injury occurring 
prior to the date of the enactment of this Act shall be 
governed by the applicable statute of limitations provisions 
in effect at the time the injury occurred. 
DIVISION D—PROTECTING THE 
DOCTOR-PATIENT RELATION-
SHIP 
SEC. 401. RULE OF CONSTRUCTION. 
Nothing in this Act shall be construed to interfere 
with the doctor-patient relationship or the practice of med-
icine. 
SEC. 402. REPEAL OF FEDERAL COORDINATING COUNCIL 
FOR 
COMPARATIVE 
EFFECTIVENESS 
RE-
SEARCH. 
Effective on the date of the enactment of this Act, 
section 804 of the American Recovery and Reinvestment 
Act of 2009 is repealed. 
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DIVISION 
E—INCENTIVIZING 
WELLNESS AND QUALITY IM-
PROVEMENTS 
SEC. 501. INCENTIVES FOR PREVENTION AND WELLNESS 
PROGRAMS. 
(a) EMPLOYEE RETIREMENT INCOME SECURITY ACT 
OF 1974 LIMITATION ON EXCEPTION FOR WELLNESS 
PROGRAMS UNDER HIPAA DISCRIMINATION RULES.— 
(1) IN
GENERAL.—Section 702(b)(2) of the 
Employee Retirement Income Security Act of 1974 
(29 U.S.C. 1182(b)(2)) is amended by adding after 
and below subparagraph (B) the following: 
‘‘In applying subparagraph (B), a group health plan 
(or a health insurance issuer with respect to health 
insurance coverage) may vary premiums and cost- 
sharing by up to 50 percent of the value of the bene-
fits under the plan (or coverage) based on participa-
tion in a standards-based wellness program.’’. 
(2) EFFECTIVE DATE.—The amendment made 
by paragraph (1) shall apply to plan years beginning 
more than 1 year after the date of the enactment of 
this Act. 
(b) CONFORMING AMENDMENTS TO PHSA.— 
(1) GROUP MARKET RULES.— 
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(A) IN GENERAL.—Section 2702(b)(2) of 
the Public Health Service Act (42 U.S.C. 
300gg–1(b)(2)) is amended by adding after and 
below subparagraph (B) the following: 
‘‘In applying subparagraph (B), a group health plan 
(or a health insurance issuer with respect to health 
insurance coverage) may vary premiums and cost- 
sharing by up to 50 percent of the value of the bene-
fits under the plan (or coverage) based on participa-
tion in a standards-based wellness program.’’. 
(B) EFFECTIVE
DATE.—The amendment 
made by subparagraph (A) shall apply to plan 
years beginning more than 1 year after the date 
of the enactment of this Act. 
(2) INDIVIDUAL MARKET RULES RELATING TO 
GUARANTEED AVAILABILITY.— 
(A) IN GENERAL.—Section 2741(f) of the 
Public Health Service Act (42 U.S.C. 300gg– 
1(b)(2)) is amended by adding after and below 
paragraph (1) the following: 
‘‘In applying paragraph (2), a health insurance issuer may 
vary premiums and cost-sharing under health insurance 
coverage by up to 50 percent of the value of the benefits 
under the coverage based on participation in a standards- 
based wellness program.’’. 
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(B) EFFECTIVE
DATE.—The amendment 
made by paragraph (1) shall apply to health in-
surance coverage offered or renewed on and 
after the date that is 1 year after the date of 
the enactment of this Act. 
(c) CONFORMING AMENDMENTS TO IRC.— 
(1) IN GENERAL.—Section 9802(b)(2) of the 
Internal Revenue Code of 1986 is amended by add-
ing after and below subparagraph (B) the following: 
‘‘In applying subparagraph (B), a group health plan 
(or a health insurance issuer with respect to health 
insurance coverage) may vary premiums and cost- 
sharing by up to 50 percent of the value of the bene-
fits under the plan (or coverage) based on participa-
tion in a standards-based wellness program.’’. 
(2) EFFECTIVE DATE.—The amendment made 
by paragraph (1) shall apply to plan years beginning 
more than 1 year after the date of the enactment of 
this Act. 
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DIVISION F—PROTECTING 
TAXPAYERS 
SEC. 601. PROVIDE FULL FUNDING TO HHS OIG AND 
HCFAC. 
(a) HCFAC FUNDING.—Section 1817(k)(3)(A) of 
the Social Security Act (42 U.S.C. 1395i(k)(3)(A)) is 
amended— 
(1) in clause (i)— 
(A) in subclause (IV), by striking ‘‘2009, 
and 2010’’ and inserting ‘‘and 2009’’; and 
(B) by amending subclause (V) to read as 
follows: 
‘‘(V) for each fiscal year after fis-
cal year 2009, $300,000,000.’’; and 
(2) in clause (ii)— 
(A) in subclause (IX), by striking ‘‘2009, 
and 2010’’ and inserting ‘‘and 2009’’; and 
(B) in subclause (X), by striking ‘‘2010’’ 
and inserting ‘‘2009’’ and by inserting before 
the period at the end the following: ‘‘, plus the 
amount by which the amount made available 
under clause (i)(V) for fiscal year 2010 exceeds 
the amount made available under clause (i)(IV) 
for 2009’’. 
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(b) OIG FUNDING.—There are authorized to be ap-
propriated for each of fiscal years 2010 through 2019 
$100,000,000 for the Office of the Inspector General of 
the Department of Health and Human Services for fraud 
prevention activities under the Medicare and Medicaid 
programs. 
SEC. 602. PROHIBITING TAXPAYER FUNDED ABORTIONS 
AND CONSCIENCE PROTECTIONS. 
Title 1 of the United States Code is amended by add-
ing at the end the following new chapter: 
‘‘CHAPTER 
4—PROHIBITING 
TAXPAYER 
FUNDED 
ABORTIONS 
AND 
CON-
SCIENCE PROTECTIONS 
‘‘SEC. 301. PROHIBITION ON FUNDING FOR ABORTIONS. 
‘‘No funds authorized or appropriated by federal law, 
and none of the funds in any trust fund to which funds 
are authorized or appropriated by federal law, shall be ex-
pended for any abortion. 
‘‘SEC. 302. PROHIBITION ON FUNDING FOR HEALTH BENE-
FITS PLANS THAT COVER ABORTION. 
‘‘None of the funds authorized or appropriated by 
federal law, and none of the funds in any trust fund to 
which funds are authorized or appropriated by federal law, 
shall be expended for a health benefits plan that includes 
coverage of abortion. 
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‘‘SEC. 303. TREATMENT OF ABORTIONS RELATED TO RAPE, 
INCEST, OR PRESERVING THE LIFE OF THE 
MOTHER. 
‘‘The limitations established in sections 301 and 302 
shall not apply to an abortion— 
‘‘(1) if the pregnancy is the result of an act of 
rape or incest; or 
‘‘(2) in the case where a woman suffers from a 
physical disorder, physical injury, or physical illness 
that would, as certified by a physician, place the 
woman in danger of death unless an abortion is per-
formed, including a life-endangering physical condi-
tion caused by or arising from the pregnancy itself. 
‘‘SEC. 304. CONSTRUCTION RELATING TO SUPPLEMENTAL 
COVERAGE. 
‘‘Nothing in this chapter shall be construed as pro-
hibiting any individual, entity, or State or locality from 
purchasing separate supplemental abortion plan or cov-
erage that includes abortion so long as such plan or cov-
erage is paid for entirely using only funds not authorized 
or appropriated by federal law and such plan or coverage 
shall not be purchased using matching funds required for 
a federally subsidized program, including a State’s or lo-
cality’s contribution of Medicaid matching funds. 
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‘‘SEC. 305. CONSTRUCTION RELATING TO THE USE OF NON- 
FEDERAL FUNDS FOR HEALTH COVERAGE. 
‘‘Nothing in this chapter shall be construed as re-
stricting the ability of any managed care provider or other 
organization from offering abortion coverage or the ability 
of a State to contract separately with such a provider or 
organization for such coverage with funds not authorized 
or appropriated by federal law and such plan or coverage 
shall not be purchased using matching funds required for 
a federally subsidized program, including a State’s or lo-
cality’s contribution of Medicaid matching funds. 
‘‘SEC. 306. NO GOVERNMENT DISCRIMINATION AGAINST 
CERTAIN HEALTH CARE ENTITIES. 
‘‘(a) IN GENERAL.—No funds authorized or appro-
priated by federal law may be made available to a Federal 
agency or program, or to a State or local government, if 
such agency, program, or government subjects any institu-
tional or individual health care entity to discrimination on 
the basis that the health care entity does not provide, pay 
for, provide coverage of, or refer for abortions. 
‘‘(b) HEALTH CARE ENTITY DEFINED.—For pur-
poses of this section, the term ‘health care entity’ includes 
an individual physician or other health care professional, 
a hospital, a provider-sponsored organization, a health 
maintenance organization, a health insurance plan, or any 
other kind of health care facility, organization, or plan.’’. 
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SEC. 603. IMPROVED ENFORCEMENT OF THE MEDICARE 
AND MEDICAID SECONDARY PAYER PROVI-
SIONS. 
(a) MEDICARE.— 
(1) IN GENERAL.—The Secretary, in coordina-
tion with the Inspector General of the Department 
of Health and Human Services, shall provide 
through the Coordination of Benefits Contractor for 
the identification of instances where the Medicare 
program should be, but is not, acting as a secondary 
payer to an individual’s private health benefits cov-
erage under section 1862(b) of the Social Security 
Act (42 U.S.C. 1395y(b)). 
(2) UPDATING
PROCEDURES.—The Secretary 
shall update procedures for identifying and resolving 
credit balance situations which occur under the 
Medicare program when payment under such title 
and from other health benefit plans exceed the pro-
viders’ charges or the allowed amount. 
(3) REPORT ON IMPROVED ENFORCEMENT.— 
Not later than 1 year after the date of the enact-
ment of this Act, the Secretary shall submit a report 
to Congress on progress made in improved enforce-
ment of the Medicare secondary payer provisions, in-
cluding recoupment of credit balances. 
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(b) MEDICAID.—Section 1903 of the Social Security 
Act (42 U.S.C. 1396b) is amended by adding at the end 
the following new subsection: 
‘‘(aa) ENFORCEMENT OF PAYER OF LAST RESORT 
PROVISIONS.— 
‘‘(1) SUBMISSION
OF
STATE
PLAN
AMEND-
MENT.—Each State shall submit, not later than 1 
year after the date of the enactment of this sub-
section, a State plan amendment that details how 
the State will become fully compliant with the re-
quirements of section 1902(a)(25). 
‘‘(2) BONUS FOR COMPLIANCE.—If a State sub-
mits a timely State plan amendment under para-
graph (1) that the Secretary determines provides for 
full compliance of the State with the requirements of 
section 1902(a)(25), the Secretary shall provide for 
an additional payment to the State of $1,000,000. If 
a State certifies, to the Secretary’s satisfaction, that 
it is already fully compliant with such requirements, 
such amount shall be increased to $2,000,000. 
‘‘(3) REDUCTION FOR NONCOMPLIANCE.—If a 
State does not submit such an amendment, the Sec-
retary shall reduce the Federal medical assistance 
percentage otherwise applicable under this title by 1 
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percentage point until the State submits such an 
amendment. 
‘‘(4) ONGOING REDUCTION.—If at any time the 
Secretary determines that a State is not in compli-
ance with section 1902(a)(25), regardless of the sta-
tus of the State’s submission of a State plan amend-
ment under this subsection or previous determina-
tions of compliance such requirements, the Secretary 
shall reduce the Federal medical assistance percent-
age otherwise applicable under this title for the 
State by 1 percentage point during the period of 
non-compliance as determined by the Secretary.’’. 
SEC. 604. STRENGTHEN MEDICARE PROVIDER ENROLL-
MENT STANDARDS AND SAFEGUARDS. 
(a) PROTECTING AGAINST THE FRAUDULENT USE 
OF MEDICARE PROVIDER NUMBERS.—Subject to sub-
section (c)(2)— 
(1) SCREENING NEW PROVIDERS.—As a condi-
tion of a provider of services or a supplier, including 
durable medical equipment suppliers and home 
health agencies, applying for the first time for a pro-
vider number under the Medicare program and be-
fore granting billing privileges under such title, the 
Secretary shall screen the provider or supplier for a 
criminal background or other financial or oper-
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ational irregularities through fingerprinting, licen-
sure checks, site-visits, other database checks. 
(2) APPLICATION FEES.—The Secretary shall 
impose an application charge on such a provider or 
supplier in order to cover the Secretary’s costs in 
performing the screening required under paragraph 
(1) and that is revenue neutral to the Federal gov-
ernment. 
(3) PROVISIONAL APPROVAL.—During an ini-
tial, provisional period (specified by the Secretary) 
In which such a provider or supplier has been issued 
such a number, the Secretary shall provide enhanced 
oversight of the activities of such provider or sup-
plier under the Medicare program, such as through 
prepayment review and payment limitations. 
(4) PENALTIES FOR FALSE STATEMENTS.—In 
the case of a provider or supplier that makes a false 
statement in an application for such a number, the 
Secretary may exclude the provider or supplier from 
participation under the Medicare program, or may 
impose a civil money penalty (in the amount de-
scribed in section 1128A(a)(4) of the Social Security 
Act), in the same manner as the Secretary may im-
pose such an exclusion or penalty under sections 
1128 and 1128A, respectively, of such Act in the 
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case of knowing presentation of a false claim de-
scribed in section 1128A(a)(1)(A) of such Act. 
(5) DISCLOSURE
REQUIREMENTS.—With re-
spect to approval of such an application, the Sec-
retary— 
(A) shall require applicants to disclose pre-
vious affiliation with enrolled entities that have 
uncollected debt related to the Medicare or 
Medicaid programs; 
(B) may deny approval if the Secretary de-
termines that these affiliations pose undue risk 
to the Medicare or Medicaid program, subject 
to an appeals process for the applicant as deter-
mined by the Secretary; and 
(C) may implement enhanced safeguards 
(such as surety bonds). 
(b) MORATORIA.—The Secretary may impose mora-
toria on approval of provider and supplier numbers under 
the Medicare program for new providers of services and 
suppliers as determined necessary to prevent or combat 
fraud a period of delay for any one applicant cannot ex-
ceed 30 days unless cause is shown by the Secretary. 
(c) FUNDING.— 
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(1) IN GENERAL.—There are authorized to be 
appropriated to carry out this section such sums as 
may be necessary. 
(2) CONDITION.—The provisions of paragraphs 
(1) and (2) of subsection (a) shall not apply unless 
and until funds are appropriated to carry out such 
provisions. 
SEC. 605. TRACKING BANNED PROVIDERS ACROSS STATE 
LINES. 
(a) GREATER COORDINATION.—The Secretary of 
Health and Human Services shall provide for increased 
coordination between the Administrator of the Centers for 
Medicare & Medicaid Services (in this section referred to 
as ‘‘CMS’’) and its regional offices to ensure that pro-
viders of services and suppliers that have operated in one 
State and are excluded from participation in the Medicare 
program are unable to begin operation and participation 
in the Medicare program in another State. 
(b) IMPROVED INFORMATION SYSTEMS.— 
(1) IN GENERAL.—The Secretary shall improve 
information systems to allow greater integration be-
tween databases under the Medicare program so 
that— 
(A) Medicare administrative contractors, 
fiscal intermediaries, and carriers have imme-
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diate access to information identifying providers 
and suppliers excluded from participation in the 
Medicare and Medicaid program and other Fed-
eral health care programs; and 
(B) such information can be shared across 
Federal health care programs and agencies, in-
cluding between the Departments of Health and 
Human Services, the Social Security Adminis-
tration, the Department of Veterans Affairs, 
the Department of Defense, the Department of 
Justice, and the Office of Personnel Manage-
ment. 
(c) MEDICARE/MEDICAID ‘‘ONE PI’’ DATABASE.— 
The Secretary shall implement a database that includes 
claims and payment data for all components of the Medi-
care program and the Medicaid program. 
(d) AUTHORIZING EXPANDED DATA MATCHING.— 
Notwithstanding any provision of the Computer Matching 
and Privacy Protection Act of 1988 to the contrary— 
(1) the Secretary and the Inspector General in 
the Department of Health and Human Services may 
perform data matching of data from the Medicare 
program with data from the Medicaid program; and 
(2) the Commissioner of Social Security and the 
Secretary may perform data matching of data of the 
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Social Security Administration with data from the 
Medicare and Medicaid programs. 
(e) CONSOLIDATION OF DATABASES.—The Secretary 
shall consolidate and expand into a centralized database 
for individuals and entities that have been excluded from 
Federal health care programs the Healthcare Integrity 
and Protection Data Bank, the National Practitioner 
Data Bank, the List of Excluded Individuals/Entities, and 
a national patient abuse/neglect registry. 
(f) COMPREHENSIVE PROVIDER DATABASE.— 
(1) ESTABLISHMENT.—The Secretary shall es-
tablish a comprehensive database that includes infor-
mation on providers of services, suppliers, and re-
lated entities participating in the Medicare program, 
the Medicaid program, or both. Such database shall 
include, information on ownership and business rela-
tionships, history of adverse actions, results of site 
visits or other monitoring by any program. 
(2) USE.—Prior to issuing a provider or sup-
plier number for an entity under the Medicare pro-
gram, the Secretary shall obtain information on the 
entity from such database to assure the entity quali-
fies for the issuance of such a number. 
(g) COMPREHENSIVE SANCTIONS DATABASE.—The 
Secretary shall establish a comprehensive sanctions data-
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base on sanctions imposed on providers of services, sup-
pliers, and related entities. Such database shall be over-
seen by the Inspector General of the Department of 
Health and Human Services and shall be linked to related 
databases maintained by State licensure boards and by 
Federal or State law enforcement agencies. 
(h) ACCESS
TO
CLAIMS
AND
PAYMENT
DATA-
BASES.—The Secretary shall ensure that the Inspector 
General of the Department of Health and Human Services 
and Federal law enforcement agencies have direct access 
to all claims and payment databases of the Secretary 
under the Medicare or Medicaid programs. 
(i) CIVIL MONEY PENALTIES FOR SUBMISSION OF 
ERRONEOUS INFORMATION.—In the case of a provider of 
services, supplier, or other entity that submits erroneous 
information that serves as a basis for payment of any enti-
ty under the Medicare or Medicaid program, the Secretary 
may impose a civil money penalty of not to exceed $50,000 
for each such erroneous submission. A civil money penalty 
under this subsection shall be imposed and collected in the 
same manner as a civil money penalty under subsection 
(a) of section 1128A of the Social Security Act is imposed 
and collected under that section. 
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DIVISION G—PATHWAY FOR BIO-
SIMILAR BIOLOGICAL PROD-
UCTS 
SEC. 701. LICENSURE PATHWAY FOR BIOSIMILAR BIOLOGI-
CAL PRODUCTS. 
(a) LICENSURE OF BIOLOGICAL PRODUCTS AS BIO-
SIMILAR
OR INTERCHANGEABLE.—Section 351 of the 
Public Health Service Act (42 U.S.C. 262) is amended— 
(1) in subsection (a)(1)(A), by inserting ‘‘under 
this subsection or subsection (k)’’ after ‘‘biologics li-
cense’’; and 
(2) by adding at the end the following: 
‘‘(k) LICENSURE OF BIOLOGICAL PRODUCTS AS BIO-
SIMILAR OR INTERCHANGEABLE.— 
‘‘(1) IN GENERAL.—Any person may submit an 
application for licensure of a biological product 
under this subsection. 
‘‘(2) CONTENT.— 
‘‘(A) IN GENERAL.— 
‘‘(i) REQUIRED
INFORMATION.—An 
application submitted under this subsection 
shall include information demonstrating 
that— 
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‘‘(I) the biological product is bio-
similar to a reference product based 
upon data derived from— 
‘‘(aa) analytical studies that 
demonstrate that the biological 
product is highly similar to the 
reference 
product 
notwith-
standing minor differences in 
clinically inactive components; 
‘‘(bb) animal studies (includ-
ing the assessment of toxicity); 
and 
‘‘(cc) a clinical study or 
studies (including the assessment 
of immunogenicity and phar-
macokinetics 
or 
pharmacodynamics) that are suf-
ficient to demonstrate safety, pu-
rity, and potency in 1 or more 
appropriate conditions of use for 
which the reference product is li-
censed and intended to be used 
and for which licensure is sought 
for the biological product; 
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‘‘(II) the biological product and 
reference product utilize the same 
mechanism or mechanisms of action 
for the condition or conditions of use 
prescribed, recommended, or sug-
gested in the proposed labeling, but 
only to the extent the mechanism or 
mechanisms of action are known for 
the reference product; 
‘‘(III) the condition or conditions 
of use prescribed, recommended, or 
suggested in the labeling proposed for 
the biological product have been pre-
viously approved for the reference 
product; 
‘‘(IV) the route of administra-
tion, the dosage form, and the 
strength of the biological product are 
the same as those of the reference 
product; and 
‘‘(V) the facility in which the bio-
logical product is manufactured, proc-
essed, packed, or held meets stand-
ards designed to assure that the bio-
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logical product continues to be safe, 
pure, and potent. 
‘‘(ii) 
DETERMINATION
BY
SEC-
RETARY.—The Secretary may determine, 
in the Secretary’s discretion, that an ele-
ment described in clause (i)(I) is unneces-
sary in an application submitted under this 
subsection. 
‘‘(iii) ADDITIONAL
INFORMATION.— 
An application submitted under this sub-
section— 
‘‘(I) shall include publicly avail-
able information regarding the Sec-
retary’s previous determination that 
the reference product is safe, pure, 
and potent; and 
‘‘(II) may include any additional 
information in support of the applica-
tion, including publicly available infor-
mation with respect to the reference 
product or another biological product. 
‘‘(B) INTERCHANGEABILITY.—An applica-
tion (or a supplement to an application) sub-
mitted under this subsection may include infor-
mation demonstrating that the biological prod-
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uct meets the standards described in paragraph 
(4). 
‘‘(3) EVALUATION BY SECRETARY.—Upon re-
view of an application (or a supplement to an appli-
cation) submitted under this subsection, the Sec-
retary shall license the biological product under this 
subsection if— 
‘‘(A) the Secretary determines that the in-
formation submitted in the application (or the 
supplement) is sufficient to show that the bio-
logical product— 
‘‘(i) is biosimilar to the reference 
product; or 
‘‘(ii) meets the standards described in 
paragraph (4), and therefore is inter-
changeable with the reference product; and 
‘‘(B) the applicant (or other appropriate 
person) consents to the inspection of the facility 
that is the subject of the application, in accord-
ance with subsection (c). 
‘‘(4) SAFETY
STANDARDS
FOR
DETERMINING 
INTERCHANGEABILITY.—Upon review of an applica-
tion submitted under this subsection or any supple-
ment to such application, the Secretary shall deter-
mine the biological product to be interchangeable 
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with the reference product if the Secretary deter-
mines that the information submitted in the applica-
tion (or a supplement to such application) is suffi-
cient to show that— 
‘‘(A) the biological product— 
‘‘(i) is biosimilar to the reference 
product; and 
‘‘(ii) can be expected to produce the 
same clinical result as the reference prod-
uct in any given patient; and 
‘‘(B) for a biological product that is ad-
ministered more than once to an individual, the 
risk in terms of safety or diminished efficacy of 
alternating or switching between use of the bio-
logical product and the reference product is not 
greater than the risk of using the reference 
product without such alternation or switch. 
‘‘(5) GENERAL RULES.— 
‘‘(A) ONE REFERENCE PRODUCT PER AP-
PLICATION.—A biological product, in an appli-
cation submitted under this subsection, may not 
be evaluated against more than 1 reference 
product. 
‘‘(B) REVIEW.—An application submitted 
under this subsection shall be reviewed by the 
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division within the Food and Drug Administra-
tion that is responsible for the review and ap-
proval of the application under which the ref-
erence product is licensed. 
‘‘(C) RISK EVALUATION AND MITIGATION 
STRATEGIES.—The authority of the Secretary 
with respect to risk evaluation and mitigation 
strategies under the Federal Food, Drug, and 
Cosmetic Act shall apply to biological products 
licensed under this subsection in the same man-
ner as such authority applies to biological prod-
ucts licensed under subsection (a). 
‘‘(D) RESTRICTIONS ON BIOLOGICAL PROD-
UCTS
CONTAINING
DANGEROUS
INGREDI-
ENTS.—If information in an application sub-
mitted under this subsection, in a supplement 
to such an application, or otherwise available to 
the Secretary shows that a biological product— 
‘‘(i) is, bears, or contains a select 
agent or toxin listed in section 73.3 or 
73.4 of title 42, section 121.3 or 121.4 of 
title 9, or section 331.3 of title 7, Code of 
Federal Regulations (or any successor reg-
ulations); or 
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‘‘(ii) is, bears, or contains a controlled 
substance in schedule I or II of section 
202 of the Controlled Substances Act, as 
listed in part 1308 of title 21, Code of 
Federal Regulations (or any successor reg-
ulations); 
the Secretary shall not license the biological 
product under this subsection unless the Sec-
retary determines, after consultation with ap-
propriate national security and drug enforce-
ment agencies, that there would be no increased 
risk to the security or health of the public from 
licensing such biological product under this sub-
section. 
‘‘(6) EXCLUSIVITY FOR FIRST INTERCHANGE-
ABLE
BIOLOGICAL
PRODUCT.—Upon review of an 
application submitted under this subsection relying 
on the same reference product for which a prior bio-
logical product has received a determination of inter-
changeability for any condition of use, the Secretary 
shall not make a determination under paragraph (4) 
that the second or subsequent biological product is 
interchangeable for any condition of use until the 
earlier of— 
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‘‘(A) 1 year after the first commercial 
marketing of the first interchangeable bio-
similar biological product to be approved as 
interchangeable for that reference product; 
‘‘(B) 18 months after— 
‘‘(i) a final court decision on all pat-
ents in suit in an action instituted under 
subsection (l)(5) against the applicant that 
submitted the application for the first ap-
proved interchangeable biosimilar biological 
product; or 
‘‘(ii) the dismissal with or without 
prejudice of an action instituted under sub-
section (l)(5) against the applicant that 
submitted the application for the first ap-
proved interchangeable biosimilar biological 
product; or 
‘‘(C)(i) 42 months after approval of the 
first interchangeable biosimilar biological prod-
uct if the applicant that submitted such appli-
cation has been sued under subsection (l)(5) 
and such litigation is still ongoing within such 
42-month period; or 
‘‘(ii) 18 months after approval of the first 
interchangeable biosimilar biological product if 
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the applicant that submitted such application 
has not been sued under subsection (l)(5). 
For purposes of this paragraph, the term ‘final court 
decision’ means a final decision of a court from 
which no appeal (other than a petition to the United 
States Supreme Court for a writ of certiorari) has 
been or can be taken. 
‘‘(7) EXCLUSIVITY
FOR
REFERENCE
PROD-
UCT.— 
‘‘(A) EFFECTIVE DATE OF BIOSIMILAR AP-
PLICATION APPROVAL.—Approval of an applica-
tion under this subsection may not be made ef-
fective by the Secretary until the date that is 
12 years after the date on which the reference 
product was first licensed under subsection (a). 
‘‘(B) FILING
PERIOD.—An application 
under this subsection may not be submitted to 
the Secretary until the date that is 4 years 
after the date on which the reference product 
was first licensed under subsection (a). 
‘‘(C) FIRST
LICENSURE.—Subparagraphs 
(A) and (B) shall not apply to a license for or 
approval of— 
‘‘(i) a supplement for the biological 
product that is the reference product; or 
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‘‘(ii) a subsequent application filed by 
the same sponsor or manufacturer of the 
biological product that is the reference 
product (or a licensor, predecessor in inter-
est, or other related entity) for— 
‘‘(I) a change (not including a 
modification to the structure of the bi-
ological product) that results in a new 
indication, route of administration, 
dosing schedule, dosage form, delivery 
system, delivery device, or strength; or 
‘‘(II) a modification to the struc-
ture of the biological product that 
does not result in a change in safety, 
purity, or potency. 
‘‘(8) PEDIATRIC STUDIES.— 
‘‘(A) EXCLUSIVITY.—If, before or after li-
censure of the reference product under sub-
section (a) of this section, the Secretary deter-
mines that information relating to the use of 
such product in the pediatric population may 
produce health benefits in that population, the 
Secretary makes a written request for pediatric 
studies (which shall include a timeframe for 
completing such studies), the applicant or hold-
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er of the approved application agrees to the re-
quest, such studies are completed using appro-
priate formulations for each age group for 
which the study is requested within any such 
timeframe, and the reports thereof are sub-
mitted and accepted in accordance with section 
505A(d)(3) of the Federal Food, Drug, and 
Cosmetic Act the period referred to in para-
graph (7)(A) of this subsection is deemed to be 
12 years and 6 months rather than 12 years. 
‘‘(B) EXCEPTION.—The Secretary shall 
not extend the period referred to in subpara-
graph (A) of this paragraph if the determina-
tion under section 505A(d)(3) of the Federal 
Food, Drug, and Cosmetic Act is made later 
than 9 months prior to the expiration of such 
period. 
‘‘(C) APPLICATION
OF
CERTAIN
PROVI-
SIONS.—The provisions of subsections (a), (d), 
(e), (f), (h), (j), (k), and (l) of section 505A of 
the Federal Food, Drug, and Cosmetic Act 
shall apply with respect to the extension of a 
period under subparagraph (A) of this para-
graph to the same extent and in the same man-
ner as such provisions apply with respect to the 
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extension of a period under subsection (b) or 
(c) of section 505A of the Federal Food, Drug, 
and Cosmetic Act. 
‘‘(9) GUIDANCE DOCUMENTS.— 
‘‘(A) IN
GENERAL.—The Secretary may, 
after opportunity for public comment, issue 
guidance in accordance, except as provided in 
subparagraph (B)(i), with section 701(h) of the 
Federal Food, Drug, and Cosmetic Act with re-
spect to the licensure of a biological product 
under this subsection. Any such guidance may 
be general or specific. 
‘‘(B) PUBLIC COMMENT.— 
‘‘(i) IN
GENERAL.—The Secretary 
shall provide the public an opportunity to 
comment on any proposed guidance issued 
under subparagraph (A) before issuing 
final guidance. 
‘‘(ii) INPUT REGARDING MOST VALU-
ABLE GUIDANCE.—The Secretary shall es-
tablish a process through which the public 
may provide the Secretary with input re-
garding priorities for issuing guidance. 
‘‘(C) NO REQUIREMENT FOR APPLICATION 
CONSIDERATION.—The 
issuance 
(or 
non- 
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issuance) of guidance under subparagraph (A) 
shall not preclude the review of, or action on, 
an application submitted under this subsection. 
‘‘(D) REQUIREMENT FOR PRODUCT CLASS- 
SPECIFIC
GUIDANCE.—If the Secretary issues 
product class-specific guidance under subpara-
graph (A), such guidance shall include a de-
scription of— 
‘‘(i) the criteria that the Secretary will 
use to determine whether a biological prod-
uct is highly similar to a reference product 
in such product class; and 
‘‘(ii) the criteria, if available, that the 
Secretary will use to determine whether a 
biological product meets the standards de-
scribed in paragraph (4). 
‘‘(E) CERTAIN PRODUCT CLASSES.— 
‘‘(i) GUIDANCE.—The Secretary may 
indicate in a guidance document that the 
science and experience, as of the date of 
such guidance, with respect to a product or 
product class (not including any recom-
binant protein) does not allow approval of 
an application for a license as provided 
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under this subsection for such product or 
product class. 
‘‘(ii) MODIFICATION OR REVERSAL.— 
The Secretary may issue a subsequent 
guidance document under subparagraph 
(A) to modify or reverse a guidance docu-
ment under clause (i). 
‘‘(iii) NO
EFFECT
ON
ABILITY
TO 
DENY
LICENSE.—Clause (i) shall not be 
construed to require the Secretary to ap-
prove a product with respect to which the 
Secretary has not indicated in a guidance 
document that the science and experience, 
as described in clause (i), does not allow 
approval of such an application. 
‘‘(10) NAMING.—The Secretary shall ensure 
that the labeling and packaging of each biological 
product licensed under this subsection bears a name 
that uniquely identifies the biological product and 
distinguishes it from the reference product and any 
other biological products licensed under this sub-
section following evaluation against such reference 
product. 
‘‘(l) PATENT NOTICES; RELATIONSHIP TO FINAL AP-
PROVAL.— 
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‘‘(1) DEFINITIONS.—For the purposes of this 
subsection, the term— 
‘‘(A) ‘biosimilar product’ means the bio-
logical product that is the subject of the appli-
cation under subsection (k); 
‘‘(B) ‘relevant patent’ means a patent 
that— 
‘‘(i) expires after the date specified in 
subsection (k)(7)(A) that applies to the 
reference product; and 
‘‘(ii) could reasonably be asserted 
against the applicant due to the unauthor-
ized making, use, sale, or offer for sale 
within the United States, or the importa-
tion into the United States of the bio-
similar product, or materials used in the 
manufacture of the biosimilar product, or 
due to a use of the biosimilar product in 
a method of treatment that is indicated in 
the application; 
‘‘(C) ‘reference product sponsor’ means the 
holder of an approved application or license for 
the reference product; and 
‘‘(D) ‘interested third party’ means a per-
son other than the reference product sponsor 
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that owns a relevant patent, or has the right to 
commence or participate in an action for in-
fringement of a relevant patent. 
‘‘(2) HANDLING OF CONFIDENTIAL INFORMA-
TION.—Any entity receiving confidential information 
pursuant to this subsection shall designate one or 
more individuals to receive such information. Each 
individual so designated shall execute an agreement 
in accordance with regulations promulgated by the 
Secretary. The regulations shall require each such 
individual to take reasonable steps to maintain the 
confidentiality of information received pursuant to 
this subsection and use the information solely for 
purposes authorized by this subsection. The obliga-
tions imposed on an individual who has received con-
fidential information pursuant to this subsection 
shall continue until the individual returns or de-
stroys the confidential information, a court imposes 
a protective order that governs the use or handling 
of the confidential information, or the party pro-
viding the confidential information agrees to other 
terms or conditions regarding the handling or use of 
the confidential information. 
‘‘(3) PUBLIC NOTICE BY SECRETARY.—Within 
30 days of acceptance by the Secretary of an appli-
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cation filed under subsection (k), the Secretary shall 
publish a notice identifying— 
‘‘(A) the reference product identified in the 
application; and 
‘‘(B) the name and address of an agent 
designated by the applicant to receive notices 
pursuant to paragraph (4)(B). 
‘‘(4) EXCHANGES CONCERNING PATENTS.— 
‘‘(A) 
EXCHANGES
WITH
REFERENCE 
PRODUCT SPONSOR.— 
‘‘(i) Within 30 days of the date of ac-
ceptance of the application by the Sec-
retary, the applicant shall provide the ref-
erence product sponsor with a copy of the 
application and information concerning the 
biosimilar product and its production. This 
information shall include a detailed de-
scription of the biosimilar product, its 
method of manufacture, and the materials 
used in the manufacture of the product. 
‘‘(ii) Within 60 days of the date of re-
ceipt of the information required to be pro-
vided under clause (i), the reference prod-
uct sponsor shall provide to the applicant 
a list of relevant patents owned by the ref-
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erence product sponsor, or in respect of 
which the reference product sponsor has 
the right to commence an action of in-
fringement or otherwise has an interest in 
the patent as such patent concerns the bio-
similar product. 
‘‘(iii) If the reference product sponsor 
is issued or acquires an interest in a rel-
evant patent after the date on which the 
reference product sponsor provides the list 
required by clause (ii) to the applicant, the 
reference product sponsor shall identify 
that patent to the applicant within 30 days 
of the date of issue of the patent, or the 
date of acquisition of the interest in the 
patent, as applicable. 
‘‘(B) 
EXCHANGES
WITH
INTERESTED 
THIRD PARTIES.— 
‘‘(i) At any time after the date on 
which the Secretary publishes a notice for 
an application under paragraph (3), any 
interested third party may provide notice 
to the designated agent of the applicant 
that the interested third party owns or has 
rights under 1 or more patents that may 
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be relevant patents. The notice shall iden-
tify at least 1 patent and shall designate 
an individual who has executed an agree-
ment in accordance with paragraph (2) to 
receive confidential information from the 
applicant. 
‘‘(ii) Within 30 days of the date of re-
ceiving notice pursuant to clause (i), the 
applicant shall send to the individual des-
ignated by the interested third party the 
information 
specified 
in 
subparagraph 
(A)(i), unless the applicant and interested 
third party otherwise agree. 
‘‘(iii) Within 90 days of the date of 
receiving information pursuant to clause 
(ii), the interested third party shall provide 
to the applicant a list of relevant patents 
which the interested third party owns, or 
in respect of which the interested third 
party has the right to commence or partici-
pate in an action for infringement. 
‘‘(iv) If the interested third party is 
issued or acquires an interest in a relevant 
patent after the date on which the inter-
ested third party provides the list required 
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by clause (iii), the interested third party 
shall identify that patent within 30 days of 
the date of issue of the patent, or the date 
of acquisition of the interest in the patent, 
as applicable. 
‘‘(C) IDENTIFICATION OF BASIS FOR IN-
FRINGEMENT.—For any patent identified under 
clause (ii) or (iii) of subparagraph (A) or under 
clause (iii) or (iv) of subparagraph (B), the ref-
erence product sponsor or the interested third 
party, as applicable— 
‘‘(i) shall explain in writing why the 
sponsor or the interested third party be-
lieves the relevant patent would be in-
fringed by the making, use, sale, or offer 
for sale within the United States, or im-
portation into the United States, of the 
biosimilar product or by a use of the bio-
similar product in treatment that is indi-
cated in the application; 
‘‘(ii) may specify whether the relevant 
patent is available for licensing; and 
‘‘(iii) shall specify the number and 
date of expiration of the relevant patent. 
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‘‘(D) CERTIFICATION BY APPLICANT CON-
CERNING
IDENTIFIED
RELEVANT
PATENTS.— 
Not later than 45 days after the date on which 
a patent is identified under clause (ii) or (iii) of 
subparagraph (A) or under clause (iii) or (iv) of 
subparagraph (B), the applicant shall send a 
written statement regarding each identified pat-
ent to the party that identified the patent. Such 
statement shall either— 
‘‘(i) state that the applicant will not 
commence marketing of the biosimilar 
product and has requested the Secretary to 
not grant final approval of the application 
before the date of expiration of the noticed 
patent; or 
‘‘(ii) provide a detailed written expla-
nation setting forth the reasons why the 
applicant believes— 
‘‘(I) the making, use, sale, or 
offer for sale within the United 
States, or the importation into the 
United States, of the biosimilar prod-
uct, or the use of the biosimilar prod-
uct in a treatment indicated in the ap-
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plication, would not infringe the pat-
ent; or 
‘‘(II) the patent is invalid or un-
enforceable. 
‘‘(5) ACTION
FOR
INFRINGEMENT
INVOLVING 
REFERENCE PRODUCT SPONSOR.—If an action for 
infringement concerning a relevant patent identified 
by the reference product sponsor under clause (ii) or 
(iii) of paragraph (4)(A), or by an interested third 
party under clause (iii) or (iv) of paragraph (4)(B), 
is brought within 60 days of the date of receipt of 
a statement under paragraph (4)(D)(ii), and the 
court in which such action has been commenced de-
termines the patent is infringed prior to the date ap-
plicable under subsection (k)(7)(A) or (k)(8), the 
Secretary shall make approval of the application ef-
fective on the day after the date of expiration of the 
patent that has been found to be infringed. If more 
than one such patent is found to be infringed by the 
court, the approval of the application shall be made 
effective on the day after the date that the last such 
patent expires. 
‘‘(6) NOTIFICATION OF AGREEMENTS.— 
‘‘(A) REQUIREMENTS.— 
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‘‘(i) 
AGREEMENT
BETWEEN
BIO-
SIMILAR
PRODUCT
APPLICANT
AND
REF-
ERENCE
PRODUCT
SPONSOR.—If a bio-
similar product applicant under subsection 
(k) and the reference product sponsor 
enter into an agreement described in sub-
paragraph (B), the applicant and sponsor 
shall each file the agreement in accordance 
with subparagraph (C). 
‘‘(ii) 
AGREEMENT
BETWEEN
BIO-
SIMILAR PRODUCT APPLICANTS.—If 2 or 
more biosimilar product applicants submit 
an application under subsection (k) for bio-
similar products with the same reference 
product and enter into an agreement de-
scribed in subparagraph (B), the appli-
cants shall each file the agreement in ac-
cordance with subparagraph (C). 
‘‘(B) SUBJECT MATTER OF AGREEMENT.— 
An agreement described in this subparagraph— 
‘‘(i) is an agreement between the bio-
similar product applicant under subsection 
(k) and the reference product sponsor or 
between 2 or more biosimilar product ap-
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plicants under subsection (k) regarding the 
manufacture, marketing, or sale of— 
‘‘(I) the biosimilar product (or 
biosimilar products) for which an ap-
plication was submitted; or 
‘‘(II) the reference product; 
‘‘(ii) includes any agreement between 
the biosimilar product applicant under sub-
section (k) and the reference product spon-
sor or between 2 or more biosimilar prod-
uct applicants under subsection (k) that is 
contingent upon, provides a contingent 
condition for, or otherwise relates to an 
agreement described in clause (i); and 
‘‘(iii) excludes any agreement that 
solely concerns— 
‘‘(I) purchase orders for raw ma-
terial supplies; 
‘‘(II) equipment and facility con-
tracts; 
‘‘(III) employment or consulting 
contracts; or 
‘‘(IV) packaging and labeling 
contracts. 
‘‘(C) FILING.— 
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‘‘(i) IN
GENERAL.—The text of an 
agreement required to be filed by subpara-
graph (A) shall be filed with the Assistant 
Attorney General and the Federal Trade 
Commission not later than— 
‘‘(I) 10 business days after the 
date on which the agreement is exe-
cuted; and 
‘‘(II) prior to the date of the first 
commercial marketing of, for agree-
ments 
described 
in 
subparagraph 
(A)(i), the biosimilar product that is 
the subject of the application or, for 
agreements described in subparagraph 
(A)(ii), any biosimilar product that is 
the subject of an application described 
in such subparagraph. 
‘‘(ii) IF
AGREEMENT
NOT
REDUCED 
TO TEXT.—If an agreement required to be 
filed by subparagraph (A) has not been re-
duced to text, the persons required to file 
the agreement shall each file written de-
scriptions of the agreement that are suffi-
cient to disclose all the terms and condi-
tions of the agreement. 
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‘‘(iii) CERTIFICATION.—The chief ex-
ecutive officer or the company official re-
sponsible for negotiating any agreement re-
quired to be filed by subparagraph (A) 
shall include in any filing under this para-
graph a certification as follows: ‘I declare 
under penalty of perjury that the following 
is true and correct: The materials filed 
with the Federal Trade Commission and 
the Department of Justice under section 
351(l)(6) of the Public Health Service Act, 
with respect to the agreement referenced in 
this certification: (1) represent the com-
plete, final, and exclusive agreement be-
tween the parties; (2) include any ancillary 
agreements that are contingent upon, pro-
vide a contingent condition for, or are oth-
erwise related to, the referenced agree-
ment; and (3) include written descriptions 
of any oral agreements, representations, 
commitments, or promises between the 
parties that are responsive to such section 
and have not been reduced to writing.’. 
‘‘(D) DISCLOSURE
EXEMPTION.—Any in-
formation or documentary material filed with 
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the Assistant Attorney General or the Federal 
Trade Commission pursuant to this paragraph 
shall be exempt from disclosure under section 
552 of title 5, United States Code, and no such 
information or documentary material may be 
made public, except as may be relevant to any 
administrative or judicial action or proceeding. 
Nothing in this subparagraph prevents disclo-
sure of information or documentary material to 
either body of the Congress or to any duly au-
thorized committee or subcommittee of the Con-
gress. 
‘‘(E) ENFORCEMENT.— 
‘‘(i) CIVIL
PENALTY.—Any person 
that violates a provision of this paragraph 
shall be liable for a civil penalty of not 
more than $11,000 for each day on which 
the violation occurs. Such penalty may be 
recovered in a civil action— 
‘‘(I) brought by the United 
States; or 
‘‘(II) brought by the Federal 
Trade Commission in accordance with 
the procedures established in section 
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214 
16(a)(1) of the Federal Trade Com-
mission Act. 
‘‘(ii) COMPLIANCE
AND
EQUITABLE 
RELIEF.—If any person violates any provi-
sion of this paragraph, the United States 
district court may order compliance, and 
may grant such other equitable relief as 
the court in its discretion determines nec-
essary or appropriate, upon application of 
the Assistant Attorney General or the Fed-
eral Trade Commission. 
‘‘(F) RULEMAKING.—The Federal Trade 
Commission, with the concurrence of the Assist-
ant Attorney General and by rule in accordance 
with section 553 of title 5, United States Code, 
consistent with the purposes of this para-
graph— 
‘‘(i) may define the terms used in this 
paragraph; 
‘‘(ii) may exempt classes of persons or 
agreements from the requirements of this 
paragraph; and 
‘‘(iii) may prescribe such other rules 
as may be necessary and appropriate to 
carry out the purposes of this paragraph. 
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‘‘(G) SAVINGS CLAUSE.—Any action taken 
by the Assistant Attorney General or the Fed-
eral Trade Commission, or any failure of the 
Assistant Attorney General or the Commission 
to take action, under this paragraph shall not 
at any time bar any proceeding or any action 
with respect to any agreement between a bio-
similar product applicant under subsection (k) 
and the reference product sponsor, or any 
agreement between biosimilar product appli-
cants under subsection (k), under any other 
provision of law, nor shall any filing under this 
paragraph constitute or create a presumption of 
any violation of any competition laws.’’. 
(b) DEFINITIONS.—Section 351(i) of the Public 
Health Service Act (42 U.S.C. 262(i)) is amended— 
(1) by striking ‘‘In this section, the term ‘bio-
logical product’ means’’ and inserting the following: 
‘‘In this section: 
‘‘(1) The term ‘biological product’ means’’; 
(2) in paragraph (1), as so designated, by in-
serting ‘‘protein (except any chemically synthesized 
polypeptide),’’ after ‘‘allergenic product,’’; and 
(3) by adding at the end the following: 
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‘‘(2) The term ‘biosimilar’ or ‘biosimilarity’, in 
reference to a biological product that is the subject 
of an application under subsection (k), means— 
‘‘(A) that the biological product is highly 
similar to the reference product notwith-
standing minor differences in clinically inactive 
components; and 
‘‘(B) there are no clinically meaningful dif-
ferences between the biological product and the 
reference product in terms of the safety, purity, 
and potency of the product. 
‘‘(3) The term ‘interchangeable’ or ‘inter-
changeability’, in reference to a biological product 
that is shown to meet the standards described in 
subsection (k)(4), means that the biological product 
may be substituted for the reference product without 
the intervention of the health care provider who pre-
scribed the reference product. 
‘‘(4) The term ‘reference product’ means the 
single biological product licensed under subsection 
(a) against which a biological product is evaluated in 
an application submitted under subsection (k).’’. 
(c) PRODUCTS PREVIOUSLY APPROVED UNDER SEC-
TION 505.— 
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(1) REQUIREMENT TO FOLLOW SECTION 351.— 
Except as provided in paragraph (2), an application 
for a biological product shall be submitted under 
section 351 of the Public Health Service Act (42 
U.S.C. 262) (as amended by this Act). 
(2) EXCEPTION.—An application for a biologi-
cal product may be submitted under section 505 of 
the Federal Food, Drug, and Cosmetic Act (21 
U.S.C. 355) if— 
(A) such biological product is in a product 
class for which a biological product in such 
product class is the subject of an application 
approved under such section 505 not later than 
the date of enactment of this Act; and 
(B) such application— 
(i) has been submitted to the Sec-
retary of Health and Human Services (re-
ferred to in this Act as the ‘‘Secretary’’) 
before the date of enactment of this Act; 
or 
(ii) is submitted to the Secretary not 
later than the date that is 10 years after 
the date of enactment of this Act. 
(3) LIMITATION.—Notwithstanding paragraph 
(2), an application for a biological product may not 
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be submitted under section 505 of the Federal Food, 
Drug, and Cosmetic Act (21 U.S.C. 355) if there is 
another biological product approved under sub-
section (a) of section 351 of the Public Health Serv-
ice Act that could be a reference product with re-
spect to such application (within the meaning of 
such section 351) if such application were submitted 
under subsection (k) of such section 351. 
(4) DEEMED APPROVED UNDER SECTION 351.— 
An approved application for a biological product 
under section 505 of the Federal Food, Drug, and 
Cosmetic Act (21 U.S.C. 355) shall be deemed to be 
a license for the biological product under such sec-
tion 351 on the date that is 10 years after the date 
of enactment of this Act. 
(5) DEFINITIONS.—For purposes of this sub-
section, the term ‘‘biological product’’ has the mean-
ing given such term under section 351 of the Public 
Health Service Act (42 U.S.C. 262) (as amended by 
this Act). 
SEC. 702. FEES RELATING TO BIOSIMILAR BIOLOGICAL 
PRODUCTS. 
Subparagraph (B) of section 735(1) of the Federal 
Food, Drug, and Cosmetic Act (21 U.S.C. 379g(1)) is 
amended by inserting ‘‘, including licensure of a biological 
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