560
(3) With respect to the receipt by the consor-
tium of payments made pursuant to this section, the
members of the consortium have agreed on a method
for allocating the payments among the members.
(4) The consortium meets such additional re-
quirements as the Secretary may establish.
(c) AMOUNT AND SOURCE OF PAYMENT.—The total
of payments to a qualifying consortium for a fiscal year
pursuant to subsection (a) shall not exceed the amount
that would have been paid under section 1886(h) of the
Social Security Act for the teaching hospital (or hospitals)
in the consortium. Such payments shall be made in such
proportion from each of the trust funds established under
title XVIII of such Act as the Secretary specifies.
SEC. 4736. RECOMMENDATIONS ON LONG-TERM PAYMENT
POLICIES REGARDING FINANCING TEACHING
HOSPITALS AND GRADUATE MEDICAL EDU-
CATION.
(a) IN GENERAL.—The Medicare Payment Advisory
Commission (established under section 1805 of the Social
Security Act and in this section referred to as the ‘‘Com-
mission’’) shall examine and develop recommendations on
whether and to what extent medicare payment policies and
other Federal policies regarding teaching hospitals and
graduate medical education should be reformed. Such rec-
561
ommendations shall include recommendations regarding
each of the following:
(1) The financing of graduate medical edu-
cation, including consideration of alternative broad-
based sources of funding for such education and
models for the distribution of payments under any
all-payer financing mechanism.
(2) The financing of teaching hospitals, includ-
ing consideration of the difficulties encountered by
such hospitals as competition among health care en-
tities increases. Matters considered under this para-
graph shall include consideration of the effects on
teaching hospitals of the method of financing used
for the MedicarePlus program under part C of title
XVIII of the Social Security Act.
(3) Possible methodologies for making pay-
ments for graduate medical education and the selec-
tion of entities to receive such payments. Matters
considered under this paragraph shall include—
(A) issues regarding children’s hospitals
and approved medical residency training pro-
grams in pediatrics, and
(B) whether and to what extent payments
are being made (or should be made) for train-
ing in the various nonphysician health profes-
562
sions, including social workers and psycholo-
gists.
(4) Federal policies regarding international
medical graduates.
(5) The dependence of schools of medicine on
service-generated income.
(6) Whether and to what extent the needs of
the United States regarding the supply of physi-
cians, in the aggregate and in different specialties,
will change during the 10-year period beginning on
October 1, 1997, and whether and to what extent
any such changes will have significant financial ef-
fects on teaching hospitals.
(7) Methods for promoting an appropriate num-
ber, mix, and geographical distribution of health
professionals.
(c) CONSULTATION.—In conducting the study under
subsection (a), the Commission shall consult with the
Council on Graduate Medical Education and individuals
with expertise in the area of graduate medical education,
including—
(1) deans from allopathic and osteopathic
schools of medicine;
(2) chief executive officers (or equivalent ad-
ministrative heads) from academic health centers,
563
integrated health care systems, approved medical
residency training programs, and teaching hospitals
that sponsor approved medical residency training
programs;
(3) chairs of departments or divisions from
allopathic and osteopathic schools of medicine,
schools of dentistry, and approved medical residency
training programs in oral surgery;
(4) individuals with leadership experience from
representative fields of non-physician health profes-
sionals;
(5) individuals with substantial experience in
the study of issues regarding the composition of the
health care workforce of the United States; and
(6) individuals with expertise on the financing
of health care.
(d) REPORT.—Not later than 2 years after the date
of the enactment of this Act, the Commission shall submit
to the Congress a report providing its recommendations
under this section and the reasons and justifications for
such recommendations.
564
SEC. 4737. MEDICARE SPECIAL REIMBURSEMENT RULE
FOR CERTAIN COMBINED RESIDENCY PRO-
GRAMS.
(a) IN GENERAL.—Section 1886(h)(5)(G) (42 U.S.C.
1395ww(h)(5)(G)) is amended—
(1) in clause (i), by striking ‘‘and (iii)’’ and in-
serting ‘‘, (iii), and (iv)’’; and
(2) by adding at the end the following:
‘‘(iv) SPECIAL
RULE
FOR
CERTAIN
COMBINED RESIDENCY PROGRAMS.—(I) In
the case of a resident enrolled in a com-
bined medical residency training program
in which all of the individual programs
(that are combined) are for training a pri-
mary care resident (as defined in subpara-
graph (H)), the period of board eligibility
shall be the minimum number of years of
formal training required to satisfy the re-
quirements for initial board eligibility in
the longest of the individual programs plus
one additional year.
‘‘(II) A resident enrolled in a com-
bined medical residency training program
that includes an obstetrics and gynecology
program shall qualify for the period of
board eligibility under subclause (I) if the
565
other programs such resident combines
with such obstetrics and gynecology pro-
gram are for training a primary care resi-
dent.’’.
(b) EFFECTIVE DATE.—The amendments made by
subsection (a) apply to combined medical residency pro-
grams for residency years beginning on or after July 1,
1998.
CHAPTER 5—OTHER PROVISIONS
SEC. 4741. CENTERS OF EXCELLENCE.
(a) IN GENERAL.—Title XVIII is amended by insert-
ing after section 1888 the following:
‘‘CENTERS OF EXCELLENCE
‘‘SEC. 1889. (a) IN GENERAL.—The Secretary shall
use a competitive process to contract with specific hos-
pitals or other entities for furnishing services related to
surgical procedures, and for furnishing services (unrelated
to surgical procedures) to hospital inpatients that the Sec-
retary determines to be appropriate. The services may in-
clude any services covered under this title that the Sec-
retary determines to be appropriate, including post-hos-
pital services.
‘‘(b) QUALITY STANDARDS.—
‘‘(1) IN
GENERAL.—Only entities that meet
quality standards established by the Secretary shall
be eligible to contract under this section. Contract-
566
ing entities shall implement a quality improvement
plan approved by the Secretary.
‘‘(2) PARTICIPATION
DECISION
BASED
ON
QUALITY.—Subject to subsection (c), the Secretary
shall consider quality as the primary factor in select-
ing hospitals or other entities to enter into contracts
under this section.
‘‘(c) PAYMENT.—Payment under this section shall be
made on the basis of negotiated all-inclusive rates. The
amount of payment made by the Secretary to an entity
under this title for services covered under a contract shall
not exceed the aggregate amount of the payments that the
Secretary would have otherwise made for the services.
‘‘(d) CONTRACT PERIOD.—A contract period shall be
3 years (subject to renewal), so long as the entity contin-
ues to meet quality and other contractual standards.
‘‘(e) INCENTIVES FOR USE OF CENTERS.—Entities
under a contract under this section may furnish additional
services (at no cost to an individual entitled to benefits
under this title) or waive cost-sharing, subject to the ap-
proval of the Secretary.
‘‘(f) LIMIT ON NUMBER OF CENTERS.—The Sec-
retary shall limit the number of centers in a geographic
area to the number needed to meet projected demand for
contracted services.’’.
567
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) applies to services furnished on or after Oc-
tober 1, 1997.
SEC. 4742. MEDICARE PART B SPECIAL ENROLLMENT PE-
RIOD AND WAIVER OF PART B LATE ENROLL-
MENT 
PENALTY 
AND 
MEDIGAP 
SPECIAL
OPEN ENROLLMENT PERIOD FOR CERTAIN
MILITARY RETIREES AND DEPENDENTS.
(a) MEDICARE PART B SPECIAL ENROLLMENT PE-
RIOD; WAIVER OF PART B PENALTY FOR LATE ENROLL-
MENT.—
(1) IN GENERAL.—In the case of any eligible
individual (as defined in subsection (c)), the Sec-
retary of Health and Human Services shall provide
for a special enrollment period during which the in-
dividual may enroll under part B of title XVIII of
the Social Security Act. Such period shall be for a
period of 6 months and shall begin with the first
month that begins at least 45 days after the date of
the enactment of this Act.
(2) COVERAGE PERIOD.—In the case of an eli-
gible individual who enrolls during the special enroll-
ment period provided under paragraph (1), the cov-
erage period under part B of title XVIII of the So-
cial Security Act shall begin on the first day of the
568
month following the month in which the individual
enrolls.
(3) WAIVER
OF
PART
B
LATE
ENROLLMENT
PENALTY.—In the case of an eligible individual who
enrolls during the special enrollment period provided
under paragraph (1), there shall be no increase pur-
suant to section 1839(b) of the Social Security Act
in the monthly premium under part B of title XVIII
of such Act.
(b) MEDIGAP SPECIAL OPEN ENROLLMENT PE-
RIOD.—Notwithstanding any other provision of law, an is-
suer of a medicare supplemental policy (as defined in sec-
tion 1882(g) of the Social Security Act)—
(1) may not deny or condition the issuance or
effectiveness of a medicare supplemental policy that
has a benefit package classified as ‘‘A’’, ‘‘B’’, ‘‘C’’,
or ‘‘F’’ under the standards established under sec-
tion 1882(p)(2) of the Social Security Act (42
U.S.C. 1395rr(p)(2)); and
(2) may not discriminate in the pricing of the
policy on the basis of the individual’s health status,
medical condition (including both physical and men-
tal illnesses), claims experience, receipt of health
care, medical history, genetic information, evidence
569
of insurability (including conditions arising out of
acts of domestic violence), or disability;
in the case of an eligible individual who seeks to enroll
(and is enrolled) during the 6-month period described in
subsection (a)(1).
(c) ELIGIBLE INDIVIDUAL DEFINED.—In this sec-
tion, the term ‘‘eligible individual’’ means an individual—
(1) who, as of the date of the enactment of this
Act, has attained 65 years of age and was eligible
to enroll under part B of title XVIII of the Social
Security Act, and
(2) who at the time the individual first satisfied
paragraph (1) or (2) of section 1836 of the Social
Security Act—
(A) was a covered beneficiary (as defined
in section 1072(5) of title 10, United States
Code), and
(B) did not elect to enroll (or to be deemed
enrolled) under section 1837 of the Social Secu-
rity Act during the individual’s initial enroll-
ment period.
The Secretary of Health and Human Services shall con-
sult with the Secretary of Defense in the identification of
eligible individuals.
570
SEC. 4743. COMPETITIVE BIDDING FOR CERTAIN ITEMS
AND SERVICES.
(a) ESTABLISHMENT
OF
DEMONSTRATION.—Not
later than 1 year after the date of the enactment of this
Act, the Secretary of Health and Human Services shall
establish and operate over a 2-year period a demonstration
project in 2 geographic regions selected by the Secretary
under which (notwithstanding any provision of title XVIII
of the Social Security Act to the contrary) the amount
of payment made under the medicare program for a se-
lected item or service furnished in the region shall be equal
to the price determined pursuant to a competitive bidding
process which meets the requirements of subsection (b).
(b) REQUIREMENTS
FOR COMPETITIVE BIDDING
PROCESS.—The competitive bidding process used under
the demonstration project under this section shall meet
such requirements as the Secretary may impose to ensure
the cost-effective delivery to medicare beneficiaries in the
project region of items and services of high quality.
(c) DETERMINATION OF SELECTED ITEMS OR SERV-
ICES.—The Secretary shall select items and services to be
subject to the demonstration project under this section if
the Secretary determines that the use of competitive bid-
ding with respect to the item or service under the project
will be appropriate and cost-effective. In determining the
items or services to be selected, the Secretary shall consult
571
with an advisory taskforce which includes representatives
of providers and suppliers of items and services (including
small business providers and suppliers) in each geographic
region in which the project will be effective.
Subtitle I—Medical Liability
Reform
CHAPTER 1—GENERAL PROVISIONS
SEC. 4801. FEDERAL REFORM OF HEALTH CARE LIABILITY
ACTIONS.
(a) APPLICABILITY.—This subtitle governs any
health care liability action brought in any State or Federal
court, except that this subtitle shall not apply to an action
for damages arising from a vaccine-related injury or death
to the extent that title XXI of the Public Health Service
Act applies to the action.
(b) PREEMPTION.—This subtitle shall preempt any
State or applicable Federal law to the extent such law is
inconsistent with the limitations contained in this subtitle.
This subtitle shall not preempt any State or applicable
Federal law that provides for defenses or places limita-
tions on a person’s liability in addition to those contained
in this subtitle or otherwise imposes greater restrictions
than those provided in this subtitle.
572
(c) EFFECT ON SOVEREIGN IMMUNITY AND CHOICE
OF LAW OR VENUE.—Nothing in subsection (b) shall be
construed to—
(1) waive or affect any defense of sovereign im-
munity asserted by any State under any provision of
law;
(2) waive or affect any defense of sovereign im-
munity asserted by the United States;
(3) affect the applicability of any provision of
chapter 97 of title 28, United States Code;
(4) preempt State choice-of-law rules with re-
spect to claims brought by a foreign nation or a citi-
zen of a foreign nation; or
(5) affect the right of any court to transfer
venue or to apply the law of a foreign nation or to
dismiss a claim of a foreign nation or of a citizen
of a foreign nation on the ground of inconvenient
forum.
(d) AMOUNT
IN CONTROVERSY.—In an action to
which this subtitle applies and which is brought under sec-
tion 1332 of title 28, United States Code, the amount of
noneconomic damages or punitive damages, and attorneys’
fees or costs, shall not be included in determining whether
the matter in controversy exceeds the sum or value of
$50,000.
573
(e) FEDERAL COURT JURISDICTION NOT ESTAB-
LISHED ON FEDERAL QUESTION GROUNDS.—Nothing in
this subtitle shall be construed to establish any jurisdiction
in the district courts of the United States over health care
liability actions on the basis of section 1331 or 1337 of
title 28, United States Code.
SEC. 4802. DEFINITIONS.
As used in this subtitle:
(1) ACTUAL DAMAGES.—The term ‘‘actual dam-
ages’’ means damages awarded to pay for economic
loss.
(2) ALTERNATIVE DISPUTE RESOLUTION SYS-
TEM; ADR.—The term ‘‘alternative dispute resolution
system’’ or ‘‘ADR’’ means a system established
under Federal or State law that provides for the res-
olution of health care liability claims in a manner
other than through health care liability actions.
(3) CLAIMANT.—The term ‘‘claimant’’ means
any person who brings a health care liability action
and any person on whose behalf such an action is
brought. If such action is brought through or on be-
half of an estate, the term includes the claimant’s
decedent. If such action is brought through or on be-
half of a minor or incompetent, the term includes
the claimant’s legal guardian.
574
(4) CLEAR AND CONVINCING EVIDENCE.—The
term ‘‘clear and convincing evidence’’ is that meas-
ure or degree of proof that will produce in the mind
of the trier of fact a firm belief or conviction as to
the truth of the allegations sought to be established,
except that such measure or degree of proof is more
than that required under preponderance of the evi-
dence but less than that required for proof beyond
a reasonable doubt.
(5) COLLATERAL
SOURCE
PAYMENTS.—The
term ‘‘collateral source payments’’ means any
amount paid or reasonably likely to be paid in the
future to or on behalf of a claimant, or any service,
product, or other benefit provided or reasonably like-
ly to be provided in the future to or on behalf of a
claimant, as a result of an injury or wrongful death,
pursuant to—
(A) any State or Federal health, sickness,
income-disability, accident or workers’ com-
pensation Act;
(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
575
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.
(6) DEVICE.—The term ‘‘device’’ has the same
meaning given such term in section 201(h) of the
Federal Food, Drug, and Cosmetic Act (21 U.S.C.
321(h)).
(7) DRUG.—The term ‘‘drug’’ has the same
meaning given such term in section 201(g)(1) of the
Federal Food, Drug, and Cosmetic Act (21 U.S.C.
321(g)(1)).
(8) ECONOMIC
LOSS.—The term ‘‘economic
loss’’ means any pecuniary loss resulting from harm
(including the loss of earnings or other benefits re-
lated to employment, medical expense loss, replace-
ment services loss, loss due to death, burial costs,
and loss of business or employment opportunities),
to the extent recovery for such loss is allowed under
applicable State or Federal law.
(9) HARM.—The term ‘‘harm’’ means—
(A) any physical injury, illness, or death of
the claimant, or
576
(B) any mental anguish or emotional in-
jury to the claimant caused by or causing the
claimant physical injury or illness.
(10) HEALTH
CARE
LIABILITY
ACTION.—The
term ‘‘health care liability action’’ means a civil ac-
tion brought in a State or Federal court against a
health care provider, an entity 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 to provide or administer
any health benefit), or the manufacturer, distributor,
supplier, marketer, promoter, or seller of a medical
product, in which the claimant alleges a health care
liability claim.
(11) HEALTH
CARE
LIABILITY
CLAIM.—The
term ‘‘health care liability claim’’ means a claim in
which the claimant alleges that harm was caused by
the provision of (or the failure to provide) health
care services or the use of a medical product, re-
gardless of the theory of liability on which the claim
is based.
(12) HEALTH
CARE
PROVIDER.—The term
‘‘health care provider’’ means any individual, organi-
zation, or institution that is engaged in the delivery
of health care services in a State and that is re-
577
quired by the laws or regulations of the State to be
licensed or certified by the State to engage in the
delivery of such services in the State.
(13) MANUFACTURER.—The term ‘‘manufac-
turer’’ means—
(A) any person who is engaged in a busi-
ness to produce, create, make, or construct any
product (or component part of a product) and
who (i) designs or formulates the product (or
component part of the product), or (ii) has en-
gaged another person to design or formulate
the product (or component part of the product);
(B) a product seller, but only with respect
to those aspects of a product (or component
part of a product) which are created or affected
when, before placing the product in the stream
of commerce, the product seller produces, cre-
ates, makes or constructs and designs, or for-
mulates, or has engaged another person to de-
sign or formulate, an aspect of the product (or
component part of the product) made by an-
other person; or
(C) any product seller not described in
subparagraph (B) which holds itself out as a
manufacturer to the user of the product.
578
(14) 
NONECONOMIC
DAMAGES.—The 
term
‘‘noneconomic damages’’ means damages paid to an
individual for pain and suffering, inconvenience,
emotional distress, mental anguish, loss of society
and companionship, injury to reputation, humilia-
tion, and other subjective, nonpecuniary losses.
(15) PERSON.—The term ‘‘person’’ means any
individual, corporation, company, association, firm,
partnership, society, joint stock company, or any
other entity, including any governmental entity.
(16) PRODUCT SELLER.—
(A) IN GENERAL.—The term ‘‘product sell-
er’’ means a person who in the course of a busi-
ness conducted for that purpose—
(i) sells, distributes, rents, leases, pre-
pares, blends, packages, labels, or other-
wise is involved in placing a product in the
stream of commerce; or
(ii) installs, repairs, refurbishes, re-
conditions, or maintains the harm-causing
aspect of the product.
(B) EXCLUSION.—The term ‘‘product sell-
er’’ does not include—
(i) a seller or lessor of real property;
579
(ii) a provider of professional services
in any case in which the sale or use of a
product is incidental to the transaction and
the essence of the transaction is the fur-
nishing of judgment, skill, or services; or
(iii) any person who—
(I) acts in only a financial capac-
ity with respect to the sale of a prod-
uct; or
(II) leases a product under a
lease arrangement in which the lessor
does not initially select the leased
product and does not during the lease
term ordinarily control the daily oper-
ations and maintenance of the prod-
uct.
(17) PUNITIVE DAMAGES.—The term ‘‘punitive
damages’’ means damages awarded against any per-
son not to compensate for actual injury suffered, but
to punish or deter such person or others from en-
gaging in similar behavior in the future.
(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-
580
lands, the Trust Territories of the Pacific Islands,
and any other territory or possession of the United
States or any political subdivision of any of the fore-
going.
SEC. 4803. EFFECTIVE DATE.
This subtitle will apply to any health care liability ac-
tion brought in a Federal or State court and to any health
care liability claim subject to an alternative dispute resolu-
tion system, that is initiated on or after the date of enact-
ment of this subtitle.
CHAPTER 2—UNIFORM STANDARDS FOR
HEALTH CARE LIABILITY ACTIONS
SEC. 4811. STATUTE OF LIMITATIONS.
(a) GENERAL RULE.—Except as provided in sub-
section (b), a health care liability action may be filed not
later than 2 years after the date on which the claimant
discovered or, in the exercise of reasonable care, should
have discovered—
(1) the harm that is the subject of the action;
and
(2) the cause of the harm.
(b) EXCEPTION.—A person with a legal disability (as
determined under applicable law) may file a health care
liability action not later than 2 years after the date on
which the person ceases to have the legal disability.
581
(c) TRANSITIONAL PROVISION RELATING TO EXTEN-
SION OF PERIOD FOR BRINGING CERTAIN ACTIONS.—If
any provision of subsection (a) or (b) shortens the period
during which a health care liability action could be other-
wise brought pursuant to another provision of law, the
claimant may, notwithstanding subsections (a) and (b),
bring the health care liability action not later than 2 years
after the date of enactment of this Act.
SEC. 4812. CALCULATION AND PAYMENT OF DAMAGES.
(a) TREATMENT OF NONECONOMIC DAMAGES.—
(1) LIMITATION ON NONECONOMIC DAMAGES.—
The total amount of noneconomic damages that may
be awarded to a claimant for harm which is the sub-
ject of a health care liability action may not exceed
$250,000, regardless of the number of parties
against whom the action is brought or the number
of actions brought with respect to the injury.
(2) FAIR SHARE RULE FOR NONECONOMIC DAM-
AGES.—
(A) GENERAL RULE.—In a health care li-
ability action, the liability of each defendant for
noneconomic damages shall be several only and
shall not be joint.
(B) AMOUNT OF LIABILITY.—
582
(i) IN
GENERAL.—Each defendant
shall be liable only for the amount of non-
economic damages attributable to the de-
fendant in direct proportion to the percent-
age of responsibility of the defendant (de-
termined in accordance with paragraph
(2)) for the harm to the claimant with re-
spect to which the defendant is liable. The
court shall render a separate judgment
against each defendant in an amount de-
termined pursuant to the preceding sen-
tence.
(ii) PERCENTAGE
OF
RESPONSIBIL-
ITY.—For purposes of determining the
amount of noneconomic damages attrib-
utable to a defendant under this section,
the trier of fact shall determine the per-
centage of responsibility of each person re-
sponsible for the claimant’s harm, whether
or not such person is a party to the action.
(b) TREATMENT OF PUNITIVE DAMAGES.—
(1) GENERAL RULE.—Punitive damages may,
to the extent permitted by applicable law, be award-
ed in a health care liability action against a defend-
ant if the claimant establishes by clear and convinc-
583
ing evidence that the harm suffered was result of
conduct manifesting a conscious, flagrant indiffer-
ence to the rights or safety of others.
(2) 
REQUIRED
PROPORTIONALITY.—The
amount of punitive damages that may be awarded in
a health care liability action shall not exceed 3 times
the amount of damages awarded to the claimant for
economic loss, or $250,000, whichever is greater.
This subsection shall be applied by the court, and
application of this subsection shall not be disclosed
to the jury.
(c) BIFURCATION AT REQUEST OF ANY PARTY.—
(1) IN GENERAL.—At the request of any party
the trier of fact in any action that is subject to this
section shall consider in a separate proceeding, held
subsequent to the determination of the amount of
compensatory damages, whether punitive damages
are to be awarded for the harm that is the subject
of the action and the amount of the award.
(2) INADMISSIBILITY OF EVIDENCE RELATIVE
ONLY TO A CLAIM OF PUNITIVE DAMAGES IN A PRO-
CEEDING CONCERNING COMPENSATORY DAMAGES.—
If any party requests a separate proceeding under
paragraph (1), in a proceeding to determine whether
the claimant may be awarded compensatory dam-
584
ages, any evidence, argument, or contention that is
relevant only to the claim of punitive damages, as
determined by applicable law, shall be inadmissible.
(d) DRUGS AND DEVICES.—
(1)(A) Punitive damages shall not be awarded
against a manufacturer or product seller of a drug
or device which caused the claimant’s harm where—
(i) such drug or device was subject to pre-
market approval by the Food and Drug Admin-
istration with respect to the safety of the for-
mulation or performance of the aspect of such
drug or device which caused the claimant’s
harm or the adequacy of the packaging or label-
ing of such drug or device, and such drug or
device was approved by the Food and Drug Ad-
ministration; or
(ii) the drug or device is generally recog-
nized as safe and effective pursuant to condi-
tions established by the Food and Drug Admin-
istration and applicable regulations, including
packaging and labeling regulations.
(B) Subparagraph (A) shall not apply in any
case in which the defendant, before or after pre-
market approval of a drug or device—
596
State shall be administered by the
State agency that is administering, or
supervising the administration of, the
State program funded under this part,
or by another State agency designated
by the Governor of the State.
‘‘(II) SPENDING BY PRIVATE IN-
DUSTRY
COUNCILS.—The private in-
dustry council for a service delivery
area shall have sole authority, in co-
ordination with the chief elected offi-
cial (as described in section 103(c) of
the Job Training Partnership Act) of
the service delivery area, to expend
the amounts provided for a service de-
livery 
area 
under 
subparagraph
(vi)(I).
‘‘(B) DEMONSTRATION PROJECTS.—
‘‘(i) IN GENERAL.—The Secretary, in
consultation with the Secretary of Health
and Human Services and the Secretary of
Housing and Urban Development, shall
make grants in accordance with this sub-
paragraph among eligible applicants based
on the likelihood that the applicant can