177
the employer or plan sponsor under such des-
ignation in accordance with subsection (o), un-
less the employer or plan sponsor affirmatively
enters into a contract to prevent the service of
the designated decisionmaker.
‘‘(C) TREATMENT
OF
CERTAIN
TRUST
FUNDS.—For purposes of this paragraph, the
terms ‘employer’ and ‘plan sponsor’, in connec-
tion with the assumption by a designated deci-
sionmaker of the liability of employer or other
plan sponsor pursuant to this paragraph, shall
be construed to include a trust fund maintained
pursuant to section 302 of the Labor Manage-
ment Relations Act, 1947 (29 U.S.C. 186) or
the Railway Labor Act (45 U.S.C. 151 et seq.).
‘‘(19) PREVIOUSLY PROVIDED SERVICES.—
‘‘(A) IN GENERAL.—Except as provided in
this paragraph, a cause of action shall not arise
under paragraph (1) where the denial involved
relates to an item or service that has already
been fully provided to the participant or bene-
ficiary under the plan or coverage and the claim
relates solely to the subsequent denial of pay-
ment for the provision of such item or service.
178
‘‘(B) EXCEPTION.—Nothing in subpara-
graph (A) shall be construed to—
‘‘(i) prohibit a cause of action under
paragraph (1) where the nonpayment in-
volved results in the participant or bene-
ficiary being unable to receive further
items or services that are directly related
to the item or service involved in the denial
referred to in subparagraph (A) or that
are part of a continuing treatment or se-
ries of procedures; or
‘‘(ii) limit liability that otherwise
would arise from the provision of the item
or services or the performance of a medical
procedure.
‘‘(20) EXEMPTION FROM PERSONAL LIABILITY
FOR INDIVIDUAL MEMBERS OF BOARDS OF DIREC-
TORS, JOINT BOARDS OF TRUSTEES, ETC.—Any indi-
vidual who is—
‘‘(A) a member of a board of directors of
an employer or plan sponsor; or
‘‘(B) a member of an association, com-
mittee, employee organization, joint board of
trustees, or other similar group of representa-
tives of the entities that are the plan sponsor
179
of plan maintained by two or more employers
and one or more employee organizations;
shall not be personally liable under this subsection
for conduct that is within the scope of employment
or of plan-related duties of the individuals unless the
individual acts in a fraudulent manner for personal
enrichment.
‘‘(o) REQUIREMENTS FOR DESIGNATED DECISION-
MAKERS OF GROUP HEALTH PLANS.—
‘‘(1) IN GENERAL.—For purposes of subsection
(n)(18) and section 514(d)(9), a designated decision-
maker meets the requirements of this paragraph
with respect to any participant or beneficiary if—
‘‘(A) such designation is in such form as
may be prescribed in regulations of the Sec-
retary,
‘‘(B) the designated decisionmaker—
‘‘(i) meets the requirements of para-
graph (2),
‘‘(ii) assumes unconditionally all liabil-
ity of the employer or plan sponsor in-
volved (and any employee of such employer
or sponsor acting within the scope of em-
ployment) either arising under subsection
(n) or arising in a cause of action per-
180
mitted under section 514(d) in connection
with actions (and failures to act) of the
employer or plan sponsor (or employee) oc-
curring during the period in which the des-
ignation under subsection (n)(18) or sec-
tion 514(d)(9) is in effect relating to such
participant and beneficiary,
‘‘(iii) agrees to be substituted for the
employer or plan sponsor (or employee) in
the action and not to raise any defense
with respect to such liability that the em-
ployer or plan sponsor (or employee) may
not raise, and
‘‘(iv) where paragraph (2)(B) applies,
assumes unconditionally the exclusive au-
thority under the group health plan to
make medically reviewable decisions under
the plan with respect to such participant
or beneficiary, and
‘‘(C) the designated decisionmaker and the
participants and beneficiaries for whom the de-
cisionmaker has assumed liability are identified
in the written instrument required under sec-
tion 402(a) and as required under section
181
121(b)(19) of the Bipartisan Patient Protection
Act.
Any liability assumed by a designated decisionmaker
pursuant to this subsection shall be in addition to
any liability that it may otherwise have under appli-
cable law.
‘‘(2) QUALIFICATIONS FOR DESIGNATED DECI-
SIONMAKERS.—
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (B), an entity is qualified under this
paragraph to serve as a designated decision-
maker with respect to a group health plan if the
entity has the ability to assume the liability de-
scribed in paragraph (1) with respect to partici-
pants and beneficiaries under such plan, includ-
ing requirements relating to the financial obli-
gation for timely satisfying the assumed liabil-
ity, and maintains with the plan sponsor and
the Secretary certification of such ability. Such
certification shall be provided to the plan spon-
sor or named fiduciary and to the Secretary
upon designation under subsection (n)(18)(B)
or section 517(d)(9)(B) and not less frequently
than annually thereafter, or if such designation
182
constitutes a multiyear arrangement, in con-
junction with the renewal of the arrangement.
‘‘(B) SPECIAL
QUALIFICATION
IN
THE
CASE OF CERTAIN REVIEWABLE DECISIONS.—In
the case of a group health plan that provides
benefits consisting of medical care to a partici-
pant or beneficiary only through health insur-
ance coverage offered by a single health insur-
ance issue, such issuer is the only entity that
may be qualified under this paragraph to serve
as a designated decisionmaker with respect to
such participant or beneficiary, and shall serve
as the designated decisionmaker unless the em-
ployer or other plan sponsor acts affirmatively
to prevent such service.
‘‘(3) REQUIREMENTS RELATING TO FINANCIAL
OBLIGATIONS.—For purposes of paragraph (2)(A),
the requirements relating to the financial obligation
of an entity for liability shall include—
‘‘(A) coverage of such entity under an in-
surance policy or other arrangement, secured
and maintained by such entity, to effectively in-
sure such entity against losses arising from pro-
fessional liability claims, including those arising
183
from its service as a designated decisionmaker
under this part; or
‘‘(B) evidence of minimum capital and sur-
plus levels that are maintained by such entity
to cover any losses as a result of liability arising
from its service as a designated decisionmaker
under this part.
The appropriate amounts of liability insurance and
minimum capital and surplus levels for purposes of
subparagraphs (A) and (B) shall be determined by
an actuary using sound actuarial principles and ac-
counting practices pursuant to established guidelines
of the American Academy of Actuaries and in ac-
cordance with such regulations as the Secretary may
prescribe and shall be maintained throughout the
term for which the designation is in effect. The pro-
visions of this paragraph shall not apply in the case
of a designated decisionmaker that is a group health
plan, plan sponsor, or health insurance issuer and
that is regulated under Federal law or a State finan-
cial solvency law.
‘‘(4) LIMITATION ON APPOINTMENT OF TREAT-
ING PHYSICIANS.—A treating physician who directly
delivered the care, treatment, or provided the patient
service that is the subject of a cause of action by a
184
participant or beneficiary under subsection (n) or
section 514(d) may not be designated as a des-
ignated decisionmaker under this subsection with re-
spect to such participant or beneficiary.’’.
(2) 
CONFORMING
AMENDMENT.—Section
502(a)(1) of such Act (29 U.S.C. 1132(a)(1)) is
amended—
(A) by striking ‘‘or’’ at the end of subpara-
graph (A);
(B) in subparagraph (B), by striking
‘‘plan;’’ and inserting ‘‘plan, or’’; and
(C) by adding at the end the following new
subparagraph:
‘‘(C) for the relief provided for in sub-
section (n) of this section.’’.
(b) RULES RELATING TO ERISA PREEMPTION.—
Section 514 of the Employee Retirement Income Security
Act of 1974 (29 U.S.C. 1144) is amended—
(1) by redesignating subsection (d) as sub-
section (f); and
(2) by inserting after subsection (c) the fol-
lowing new subsections:
‘‘(d) PREEMPTION NOT TO APPLY TO CAUSES OF
ACTION UNDER STATE LAW INVOLVING MEDICALLY RE-
VIEWABLE DECISION.—
185
‘‘(1) NON-PREEMPTION OF CERTAIN CAUSES OF
ACTION.—
‘‘(A) IN GENERAL.—Except as provided in
this subsection, nothing in this title (including
section 502) shall be construed to supersede or
otherwise alter, amend, modify, invalidate, or
impair any cause of action under State law of
a participant or beneficiary under a group
health plan (or the estate of such a participant
or beneficiary) against the plan, the plan spon-
sor, any health insurance issuer offering health
insurance coverage in connection with the plan,
or any managed care entity in connection with
the plan to recover damages resulting from per-
sonal injury or for wrongful death if such cause
of action arises by reason of a medically review-
able decision.
‘‘(B) 
MEDICALLY
REVIEWABLE
DECI-
SION.—For purposes of subparagraph (A), the
term ‘medically reviewable decision’ means a de-
nial of a claim for benefits under the plan
which is described in section 104(d)(2) of the
Bipartisan Patient Protection Act (relating to
medically reviewable decisions).
186
‘‘(C) LIMITATION
ON
PUNITIVE
DAM-
AGES.—
‘‘(i) IN
GENERAL.—Except as pro-
vided in clauses (ii) and (iii), with respect
to a cause of action described in subpara-
graph (A) brought with respect to a partic-
ipant or beneficiary, State law is super-
seded insofar as it provides any punitive,
exemplary, or similar damages if, as of the
time of the personal injury or death, all
the requirements of the following sections
of the Bipartisan Patient Protection Act
were satisfied with respect to the partici-
pant or beneficiary:
‘‘(I) Section 102 (relating to pro-
cedures for initial claims for benefits
and prior authorization determina-
tions).
‘‘(II) Section 103 of such Act
(relating to internal appeals of claims
denials).
‘‘(III) Section 104 of such Act
(relating to independent external ap-
peals procedures).
187
‘‘(ii) EXCEPTION
FOR
CERTAIN
AC-
TIONS FOR WRONGFUL DEATH.—Clause (i)
shall not apply with respect to an action
for wrongful death if the applicable State
law provides (or has been construed to pro-
vide) for damages in such an action which
are only punitive or exemplary in nature.
‘‘(iii) EXCEPTION
FOR
WILLFUL
OR
WANTON DISREGARD FOR THE RIGHTS OR
SAFETY OF OTHERS.—Clause (i) shall not
apply with respect to any cause of action
described in subparagraph (A) if, in such
action, the plaintiff establishes by clear
and convincing evidence that conduct car-
ried out by the defendant with willful or
wanton disregard for the rights or safety
of others was a proximate cause of the per-
sonal injury or wrongful death that is the
subject of the action.
‘‘(2) DEFINITIONS AND RELATED RULES.—For
purposes of this subsection and subsection (e)—
‘‘(A) TREATMENT
OF
EXCEPTED
BENE-
FITS.—Under section 154(a) of the Bipartisan
Patient Protection Act, the provisions of this
188
subsection do not apply to certain excepted ben-
efits.
‘‘(B) PERSONAL INJURY.—The term ‘per-
sonal injury’ means a physical injury and in-
cludes an injury arising out of the treatment
(or failure to treat) a mental illness or disease.
‘‘(C) CLAIM FOR BENEFIT; DENIAL.—The
terms ‘claim for benefits’ and ‘denial of a claim
for benefits’ shall have the meaning provided
such terms under section 102(e) of the Bipar-
tisan Patient Protection Act.
‘‘(D) MANAGED CARE ENTITY.—
‘‘(i) IN
GENERAL.—The term ‘man-
aged care entity’ means, in connection with
a group health plan and subject to clause
(ii), any entity that is involved in deter-
mining the manner in which or the extent
to which items or services (or reimburse-
ment therefor) are to be provided as bene-
fits under the plan.
‘‘(ii) TREATMENT OF TREATING PHY-
SICIANS, OTHER TREATING HEALTH CARE
PROFESSIONALS, 
AND
TREATING
HOS-
PITALS.—Such term does not include a
treating physician or other treating health
189
care professional (as defined in section
502(n)(6)(B)(i)) of the participant or ben-
eficiary and also does not include a treat-
ing hospital insofar as it is acting solely in
the capacity of providing treatment or care
to the participant or beneficiary. Nothing
in the preceding sentence shall be con-
strued to preempt vicarious liability of any
plan, plan sponsor, health insurance issuer,
or managed care entity.
‘‘(3) EXCLUSION OF EMPLOYERS AND OTHER
PLAN SPONSORS.—
‘‘(A) CAUSES
OF
ACTION
AGAINST
EM-
PLOYERS AND PLAN SPONSORS PRECLUDED.—
Subject to subparagraph (B), paragraph (1)
does not apply with respect to—
‘‘(i) any cause of action against an
employer or other plan sponsor maintain-
ing the plan (or against an employee of
such an employer or sponsor acting within
the scope of employment), or
‘‘(ii) a right of recovery, indemnity, or
contribution by a person against an em-
ployer or other plan sponsor (or such an
employee) for damages assessed against
190
the person pursuant to a cause of action to
which paragraph (1) applies.
‘‘(B) CERTAIN
CAUSES
OF
ACTION
PER-
MITTED.—Notwithstanding subparagraph (A),
paragraph (1) applies with respect to any cause
of action that is brought by a participant or
beneficiary under a group health plan (or the
estate of such a participant or beneficiary) to
recover damages resulting from personal injury
or for wrongful death against any employer or
other plan sponsor maintaining the plan (or
against an employee of such an employer or
sponsor acting within the scope of employment)
if such cause of action arises by reason of a
medically reviewable decision, to the extent that
there was direct participation by the employer
or other plan sponsor (or employee) in the deci-
sion.
‘‘(C) DIRECT PARTICIPATION.—
‘‘(i) DIRECT PARTICIPATION IN DECI-
SIONS.—For purposes of subparagraph
(B), the term ‘direct participation’ means,
in connection with a decision described in
subparagraph (B), the actual making of
such decision or the actual exercise of con-
191
trol in making such decision or in the con-
duct constituting the failure.
‘‘(ii) RULES OF CONSTRUCTION.—For
purposes of clause (i), the employer or plan
sponsor (or employee) shall not be con-
strued to be engaged in direct participation
because of any form of decisionmaking or
other conduct that is merely collateral or
precedent to the decision described in sub-
paragraph (B) on a particular claim for
benefits of a particular participant or bene-
ficiary, including (but not limited to)—
‘‘(I) any participation by the em-
ployer or other plan sponsor (or em-
ployee) in the selection of the group
health plan or health insurance cov-
erage involved or the third party ad-
ministrator or other agent;
‘‘(II) any engagement by the em-
ployer or other plan sponsor (or em-
ployee) in any cost-benefit analysis
undertaken in connection with the se-
lection of, or continued maintenance
of, the plan or coverage involved;
192
‘‘(III) any participation by the
employer or other plan sponsor (or
employee) in the process of creating,
continuing, modifying, or terminating
the plan or any benefit under the
plan, if such process was not substan-
tially focused solely on the particular
situation of the participant or bene-
ficiary 
referred 
to 
in 
paragraph
(1)(A); and
‘‘(IV) any participation by the
employer or other plan sponsor (or
employee) in the design of any benefit
under the plan, including the amount
of copayment and limits connected
with such benefit.
‘‘(iv) IRRELEVANCE OF CERTAIN COL-
LATERAL
EFFORTS
MADE
BY
EMPLOYER
OR PLAN SPONSOR.—For purposes of this
subparagraph, an employer or plan sponsor
shall not be treated as engaged in direct
participation in a decision with respect to
any claim for benefits or denial thereof in
the case of any particular participant or
beneficiary solely by reason of—
193
‘‘(I) any efforts that may have
been made by the employer or plan
sponsor to advocate for authorization
of coverage for that or any other par-
ticipant or beneficiary (or any group
of participants or beneficiaries), or
‘‘(II) any provision that may
have been made by the employer or
plan sponsor for benefits which are
not covered under the terms and con-
ditions of the plan for that or any
other participant or beneficiary (or
any group of participants or bene-
ficiaries).
‘‘(4) REQUIREMENT OF EXHAUSTION.—
‘‘(A) IN GENERAL.—Except as provided in
subparagraph (D), a cause of action may not be
brought under paragraph (1) in connection with
any denial of a claim for benefits of any indi-
vidual until all administrative processes under
sections 102, 103, and 104 of the Bipartisan
Patient Protection Act (if applicable) have been
exhausted.
‘‘(B) LATE MANIFESTATION OF INJURY.—
194
‘‘(i) IN GENERAL.—A participant or
beneficiary shall not be precluded from
pursuing a review under section 104 of the
Bipartisan Patient Protection Act regard-
ing an injury that such participant or ben-
eficiary has experienced if the external re-
view entity first determines that the injury
of such participant or beneficiary is a late
manifestation of an earlier injury.
‘‘(ii) DEFINITION.—In this subpara-
graph, the term ‘late manifestation of an
earlier injury’ means an injury sustained
by the participant or beneficiary which was
not known, and should not have been
known, by such participant or beneficiary
by the latest date that the requirements of
subparagraph (A) should have been met
regarding the claim for benefits which was
denied.
‘‘(C) EXCEPTION FOR NEEDED CARE.—A
participant or beneficiary may seek relief exclu-
sively in Federal court under subsection
502(a)(1)(B) prior to the exhaustion of admin-
istrative remedies under sections 102, 103, or
104 of the Bipartisan Patient Protection Act
195
(as required under subparagraph (A)) if it is
demonstrated to the court that the exhaustion
of such remedies would cause irreparable harm
to the health of the participant or beneficiary.
Notwithstanding the awarding of relief under
subsection 502(a)(1)(B) pursuant to this sub-
paragraph, no relief shall be available as a re-
sult of, or arising under, paragraph (1)(A) un-
less the requirements of subparagraph (A) are
met.
‘‘(D) FAILURE TO REVIEW.—
‘‘(i) IN GENERAL.—If the external re-
view entity fails to make a determination
within the time required under section
104(e)(1)(A)(i), a participant or bene-
ficiary may bring an action under section
514(d) after 10 additional days after the
date on which such time period has expired
and the filing of such action shall not af-
fect the duty of the independent medical
reviewer (or reviewers) to make a deter-
mination 
pursuant 
to 
section
104(e)(1)(A)(i).
‘‘(ii) EXPEDITED DETERMINATION.—
If the external review entity fails to make
196
a determination within the time required
under section 104(e)(1)(A)(ii), a partici-
pant or beneficiary may bring an action
under this subsection and the filing of such
an action shall not affect the duty of the
independent medical reviewer (or review-
ers) to make a determination pursuant to
section 104(e)(1)(A)(ii).
‘‘(E) RECEIPT OF BENEFITS DURING AP-
PEALS PROCESS.—Receipt by the participant or
beneficiary of the benefits involved in the claim
for benefits during the pendency of any admin-
istrative processes referred to in subparagraph
(A) or of any action commenced under this
subsection—
‘‘(i) shall not preclude continuation of
all such administrative processes to their
conclusion if so moved by any party, and
‘‘(ii) shall not preclude any liability
under subsection (a)(1)(C) and this sub-
section in connection with such claim.
‘‘(F) 
ADMISSIBLE.—Any 
determination
made by a reviewer in an administrative pro-
ceeding under section 104 of the Bipartisan Pa-
tient Protection Act shall be admissible in any
197
Federal or State court proceeding and shall be
presented to the trier of fact.
‘‘(5) TOLLING PROVISION.—The statute of limi-
tations for any cause of action arising under section
502(n) relating to a denial of a claim for benefits
that is the subject of an action brought in State
court shall be tolled until such time as the State
court makes a final disposition, including all ap-
peals, of whether such claim should properly be
within the jurisdiction of the State court. The tolling
period shall be determined by the applicable Federal
or State law, whichever period is greater.
‘‘(6) 
EXCLUSION
OF
DIRECTED
RECORD-
KEEPERS.—
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (C), paragraph (1) shall not apply with
respect to a directed recordkeeper in connection
with a group health plan.
‘‘(B) 
DIRECTED
RECORDKEEPER.—For
purposes of this paragraph, the term ‘directed
recordkeeper’ means, in connection with a
group health plan, a person engaged in directed
recordkeeping activities pursuant to the specific
instructions of the plan or the employer or
other plan sponsor, including the distribution of
198
enrollment information and distribution of dis-
closure materials under this Act or title I of the
Bipartisan Patient Protection Act and whose
duties do not include making decisions on
claims for benefits.
‘‘(C) 
LIMITATION.—Subparagraph 
(A)
does not apply in connection with any directed
recordkeeper to the extent that the directed rec-
ordkeeper fails to follow the specific instruction
of the plan or the employer or other plan spon-
sor.
‘‘(7) CONSTRUCTION.—Nothing in this sub-
section shall be construed as—
‘‘(A) saving from preemption a cause of
action under State law for the failure to provide
a benefit for an item or service which is specifi-
cally excluded under the group health plan in-
volved, except to the extent that—
‘‘(i) the application or interpretation
of the exclusion involves a determination
described in section 104(d)(2) of the Bi-
partisan Patient Protection Act, or
‘‘(ii) the provision of the benefit for
the item or service is required under Fed-
199
eral law or under applicable State law con-
sistent with subsection (b)(2)(B);
‘‘(B) preempting a State law which re-
quires an affidavit or certificate of merit in a
civil action;
‘‘(C) affecting a cause of action or remedy
under State law in connection with the provi-
sion or arrangement of excepted benefits (as de-
fined in section 733(c)), other than those de-
scribed in section 733(c)(2)(A); or
‘‘(D) affecting a cause of action under
State law other than a cause of action described
in paragraph (1)(A).
‘‘(8) PURCHASE OF INSURANCE TO COVER LI-
ABILITY.—Nothing in section 410 shall be construed
to preclude the purchase by a group health plan of
insurance to cover any liability or losses arising
under a cause of action described in paragraph
(1)(A).
‘‘(9) RELIEF FROM LIABILITY FOR EMPLOYER
OR
OTHER
PLAN
SPONSOR
BY
MEANS
OF
DES-
IGNATED DECISIONMAKER.—
‘‘(A) IN
GENERAL.—Paragraph (1) shall
not apply with respect to any cause of action
described in paragraph (1)(A) under State law
200
insofar as such cause of action provides for li-
ability with respect to a participant or bene-
ficiary of an employer or plan sponsor (or an
employee of such employer or sponsor acting
within the scope of employment), if with respect
to the employer or plan sponsor there is (or is
deemed under subparagraph (B) to be) a des-
ignated decisionmaker that meets the require-
ments of section 502(o)(1) with respect to such
participant or beneficiary. Such paragraph (1)
shall apply with respect to any cause of action
described in paragraph (1)(A) under State law
against the designated decisionmaker of such
employer or other plan sponsor with respect to
the participant or beneficiary.
‘‘(B) AUTOMATIC DESIGNATION.—A health
insurance issuer shall be deemed to be a des-
ignated decisionmaker for purposes of subpara-
graph (A) with respect to the participants and
beneficiaries of an employer or plan sponsor,
whether or not the employer or plan sponsor
makes such a designation, and shall be deemed
to have assumed unconditionally all liability of
the employer or plan sponsor under such des-
ignation in accordance with subsection (o), un-
201
less the employer or plan sponsor affirmatively
enters into a contract to prevent the service of
the designated decisionmaker.
‘‘(C) TREATMENT
OF
CERTAIN
TRUST
FUNDS.—For purposes of this paragraph, the
terms ‘employer’ and ‘plan sponsor’, in connec-
tion with the assumption by a designated deci-
sionmaker of the liability of employer or other
plan sponsor pursuant to this paragraph, shall
be construed to include a trust fund maintained
pursuant to section 302 of the Labor Manage-
ment Relations Act, 1947 (29 U.S.C. 186) or
the Railway Labor Act (45 U.S.C. 151 et seq.).
‘‘(10) PREVIOUSLY PROVIDED SERVICES.—
‘‘(A) IN GENERAL.—Except as provided in
this paragraph, a cause of action shall not arise
under paragraph (1) where the denial involved
relates to an item or service that has already
been fully provided to the participant or bene-
ficiary under the plan or coverage and the claim
relates solely to the subsequent denial of pay-
ment for the provision of such item or service.
‘‘(B) EXCEPTION.—Nothing in subpara-
graph (A) shall be construed to—
202
‘‘(i) prohibit a cause of action under
paragraph (1) where the nonpayment in-
volved results in the participant or bene-
ficiary being unable to receive further
items or services that are directly related
to the item or service involved in the denial
referred to in subparagraph (A) or that
are part of a continuing treatment or se-
ries of procedures;
‘‘(ii) prohibit a cause of action under
paragraph (1) relating to quality of care;
or
‘‘(iii) limit liability that otherwise
would arise from the provision of the item
or services or the performance of a medical
procedure.
‘‘(11) EXEMPTION FROM PERSONAL LIABILITY
FOR INDIVIDUAL MEMBERS OF BOARDS OF DIREC-
TORS, JOINT BOARDS OF TRUSTEES, ETC.—Any indi-
vidual who is—
‘‘(A) a member of a board of directors of
an employer or plan sponsor; or
‘‘(B) a member of an association, com-
mittee, employee organization, joint board of
trustees, or other similar group of representa-
203
tives of the entities that are the plan sponsor
of plan maintained by two or more employers
and one or more employee organizations;
shall not be personally liable under this subsection
for conduct that is within the scope of employment
or of plan-related duties of the individuals unless the
individual acts in a fraudulent manner for personal
enrichment.
‘‘(12) CHOICE
OF
LAW.—A cause of action
brought under paragraph (1) shall be governed by
the law (including choice of law rules) of the State
in which the plaintiff resides.
‘‘(13) LIMITATION ON ATTORNEYS’ FEES.—
‘‘(A) IN GENERAL.—Notwithstanding any
other provision of law, or any arrangement,
agreement, or contract regarding an attorney’s
fee, the amount of an attorney’s contingency fee
allowable for a cause of action brought under
paragraph (1) shall not exceed 1⁄3 of the total
amount of the plaintiff’s recovery (not including
the reimbursement of actual out-of-pocket ex-
penses of the attorney).
‘‘(B) DETERMINATION
BY
COURT.—The
last court in which the action was pending upon
the final disposition, including all appeals, of
204
the action may review the attorney’s fee to en-
sure that the fee is a reasonable one.
‘‘(C) NO PREEMPTION OF STATE LAW.—
Subparagraph (A) shall not apply with respect
to a cause of action under paragraph (1) that
is brought in a State that has a law or frame-
work of laws with respect to the amount of an
attorney’s contingency fee that may be incurred
for the representation of a participant or bene-
ficiary (or the estate of such participant or ben-
eficiary) who brings such a cause of action.
‘‘(e) RULES
OF
CONSTRUCTION
RELATING
TO
HEALTH CARE.—Nothing in this title shall be construed
as—
‘‘(1) affecting any State law relating to the
practice of medicine or the provision of, or the fail-
ure to provide, medical care, or affecting any action
(whether the liability is direct or vicarious) based
upon such a State law,
‘‘(2) superseding any State law permitted under
section 152(b)(1)(A) of the Bipartisan Patient Pro-
tection Act, or
‘‘(3) affecting any applicable State law with re-
spect to limitations on monetary damages.
205
‘‘(f) NO RIGHT OF ACTION FOR RECOVERY, INDEM-
NITY, OR CONTRIBUTION BY ISSUERS AGAINST TREATING
HEALTH CARE PROFESSIONALS
AND TREATING HOS-
PITALS.—In the case of any care provided, or any treat-
ment decision made, by the treating health care profes-
sional or the treating hospital of a participant or bene-
ficiary under a group health plan which consists of medical
care provided under such plan, any cause of action under
State law against the treating health care professional or
the treating hospital by the plan or a health insurance
issuer providing health insurance coverage in connection
with the plan for recovery, indemnity, or contribution in
connection with such care (or any medically reviewable de-
cision made in connection with such care) or such treat-
ment decision is superseded.’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to acts and omissions (from which
a cause of action arises) occurring on or after the applica-
ble effective under section 601.
SEC. 403. LIMITATION ON CERTAIN CLASS ACTION LITIGA-
TION.
Section 502 of the Employee Retirement Income Se-
curity Act of 1974 (29 U.S.C. 1132), as amended by sec-
tion 402, is further amended by adding at the end the
following:
206
‘‘(p) LIMITATION ON CLASS ACTION LITIGATION.—
‘‘(1) IN GENERAL.—Any claim or cause of ac-
tion that is maintained under this section in connec-
tion with a group health plan, or health insurance
coverage issued in connection with a group health
plan, as a class action, derivative action, or as an ac-
tion on behalf of any group of 2 or more claimants,
may be maintained only if the class, the derivative
claimant, or the group of claimants is limited to the
participants or beneficiaries of a group health plan
established by only 1 plan sponsor. No action main-
tained by such class, such derivative claimant, or
such group of claimants may be joined in the same
proceeding with any action maintained by another
class, derivative claimant, or group of claimants or
consolidated for any purpose with any other pro-
ceeding. In this paragraph, the terms ‘group health
plan’ and ‘health insurance coverage’ have the mean-
ings given such terms in section 733.
‘‘(2) EFFECTIVE DATE.—This subsection shall
apply to all civil actions that are filed on or after
January 1, 2002.’’.
SEC. 404. LIMITATIONS ON ACTIONS.
Section 502 of the Employee Retirement Income Se-
curity Act of 1974 (29 U.S.C. 1132) (as amended by sec-
207
tion 402(a)) is amended further by adding at the end the
following new subsection:
‘‘(q) LIMITATIONS ON ACTIONS RELATING TO GROUP
HEALTH PLANS.—
‘‘(1) IN GENERAL.—Except as provided in para-
graph (2), no action may be brought under sub-
section (a)(1)(B), (a)(2), or (a)(3) by a participant
or beneficiary seeking relief based on the application
of any provision in section 101, subtitle B, or sub-
title D of title I of the Bipartisan Patient Protection
Act (as incorporated under section 714).
‘‘(2) CERTAIN ACTIONS ALLOWABLE.—An ac-
tion may be brought under subsection (a)(1)(B),
(a)(2), or (a)(3) by a participant or beneficiary seek-
ing relief based on the application of section 101,
113, 114, 115, 116, 117, 118(a)(3), 119, or 120 of
the Bipartisan Patient Protection Act (as incor-
porated under section 714) to the individual cir-
cumstances of that participant or beneficiary, except
that—
‘‘(A) such an action may not be brought or
maintained as a class action; and
‘‘(B) in such an action, relief may only
provide for the provision of (or payment of)
benefits, items, or services denied to the indi-
208
vidual participant or beneficiary involved (and
for attorney’s fees and the costs of the action,
at the discretion of the court) and shall not pro-
vide for any other relief to the participant or
beneficiary or for any relief to any other person.
‘‘(3) OTHER PROVISIONS UNAFFECTED.—Noth-
ing in this subsection shall be construed as affecting
subsections (a)(1)(C) and (n) or section 514(d).
‘‘(4) ENFORCEMENT
BY
SECRETARY
UNAF-
FECTED.—Nothing in this subsection shall be con-
strued as affecting any action brought by the Sec-
retary.’’.
SEC. 405. COOPERATION BETWEEN FEDERAL AND STATE
AUTHORITIES.
Subpart C of part 7 of subtitle B of title I of the
Employee Retirement Income Security Act of 1974 (29
U.S.C. 1191 et seq.) is amended by adding at the end
the following new section:
‘‘SEC. 735. COOPERATION BETWEEN FEDERAL AND STATE
AUTHORITIES.
‘‘(a) AGREEMENT WITH STATES.—A State may enter
into an agreement with the Secretary for the delegation
to the State of some or all of the Secretary’s authority
under this title to enforce the requirements applicable
under title I of the Bipartisan Patient Protection Act with
209
respect to health insurance coverage offered by a health
insurance issuer and with respect to a group health plan
that is a non-Federal governmental plan.
‘‘(b) DELEGATIONS.—Any department, agency, or in-
strumentality of a State to which authority is delegated
pursuant to an agreement entered into under this section
may, if authorized under State law and to the extent con-
sistent with such agreement, exercise the powers of the
Secretary under this title which relate to such authority.’’.
SEC. 406. SENSE OF THE SENATE CONCERNING THE IMPOR-
TANCE OF CERTAIN UNPAID SERVICES.
It is the sense of the Senate that the court should
consider the loss of a nonwage earning spouse or parent
as an economic loss for the purposes of this section. Fur-
thermore, the court should define the compensation for the
loss not as minimum services, but, rather, in terms that
fully compensate for the true and whole replacement cost
to the family.
210
TITLE V—AMENDMENTS TO THE
INTERNAL 
REVENUE 
CODE
OF 1986
Subtitle A—Application of Patient
Protection Provisions
SEC. 501. APPLICATION TO GROUP HEALTH PLANS UNDER
THE INTERNAL REVENUE CODE OF 1986.
Subchapter B of chapter 100 of the Internal Revenue
Code of 1986 is amended—
(1) in the table of sections, by inserting after
the item relating to section 9812 the following new
item:
‘‘Sec. 9813. Standard relating to patients’ bill of rights.’’;
and
(2) by inserting after section 9812 the fol-
lowing:
‘‘SEC. 9813. STANDARD RELATING TO PATIENTS’ BILL OF
RIGHTS.
‘‘A group health plan shall comply with the require-
ments of title I of the Bipartisan Patient Protection Act
(as in effect as of the date of the enactment of such Act),
and such requirements shall be deemed to be incorporated
into this section.’’.
211
SEC. 502. CONFORMING ENFORCEMENT FOR WOMEN’S
HEALTH AND CANCER RIGHTS.
Subchapter B of chapter 100 of the Internal Revenue
Code of 1986, as amended by section 501, is further
amended—
(1) in the table of sections, by inserting after
the item relating to section 9813 the following new
item:
‘‘Sec. 9814. Standard relating to women’s health and cancer
rights.’’;
and
(2) by inserting after section 9813 the fol-
lowing:
‘‘SEC. 9814. STANDARD RELATING TO WOMEN’S HEALTH
AND CANCER RIGHTS.
‘‘The provisions of section 713 of the Employee Re-
tirement Income Security Act of 1974 (as in effect as of
the date of the enactment of this section) shall apply to
group health plans as if included in this subchapter.’’.
Subtitle B—Health Care Coverage
Access Tax Incentives
SEC. 511. EXPANDED AVAILABILITY OF ARCHER MSAS.
(a) EXTENSION OF PROGRAM.—Paragraphs (2) and
(3)(B) of section 220(i) of the Internal Revenue Code of
1986 (defining cut-off year) are each amended by striking
‘‘2002’’ each place it appears and inserting ‘‘2004’’.
212
(b) INCREASE IN NUMBER OF PERMITTED ACCOUNT
PARTICIPANTS.—
(1) IN GENERAL.—Subsection (j) of section 220
of such Code is amended by redesignating para-
graphs (3), (4), and (5) as paragraphs (4), (5), and
(6) and by inserting after paragraph (2) the fol-
lowing new paragraph:
‘‘(3) DETERMINATION OF WHETHER LIMIT EX-
CEEDED FOR YEARS AFTER 2001.—
‘‘(A) IN GENERAL.—The numerical limita-
tion for any year after 2001 is exceeded if the
sum of—
‘‘(i) the number of Archer MSA re-
turns filed on or before April 15 of such
calendar year for taxable years ending with
or within the preceding calendar year, plus
‘‘(ii) the Secretary’s estimate (deter-
mined on the basis of the returns described
in clause (i)) of the number of Archer
MSA returns for such taxable years which
will be filed after such date, exceeds
1,000,000. For purposes of the preceding
sentence, the term ‘Archer MSA return’
means any return on which any exclusion
213
is claimed under section 106(b) or any de-
duction is claimed under this section.
‘‘(B) ALTERNATIVE COMPUTATION OF LIM-
ITATION.—The numerical limitation for any
year after 2001 is also exceeded if the sum of—
‘‘(i) 90 percent of the sum determined
under subparagraph (A) for such calendar
year, plus
‘‘(ii) the product of 2.5 and the num-
ber of medical savings accounts established
during the portion of such year preceding
July 1 (based on the reports required
under paragraph (5)) for taxable years be-
ginning in such year,
exceeds 1,000,000’’.
(2) CONFORMING AMENDMENTS.—
(A) Clause (ii) of section 220(j)(2)(B) of
such Code is amended by striking ‘‘paragraph
(4)’’ and inserting ‘‘paragraph (5)’’.
(B) Subparagraph (A) of section 220(j)(4)
of such Code is amended by striking ‘‘and
2001’’ and inserting ‘‘2001, 2002, and 2003’’.
(c) INCREASE IN SIZE OF ELIGIBLE EMPLOYERS.—
Subparagraph (A) of section 220(c)(4) of such Code is
214
amended by striking ‘‘50 or fewer employees’’ and insert-
ing ‘‘100 or fewer employees’’.
(d) EFFECTIVE DATE.—The amendments made by
this section shall take effect on the date of the enactment
of this Act.
(e) GAO STUDY.—Not later than 1 year after the
date of the enactment of this Act, the Comptroller General
of the United States shall prepare and submit a report
to the Committee on Ways and Means of the House of
Representatives and the Committee on Finance of the
Senate on the impact of Archer MSAs on the cost of con-
ventional insurance (especially in those areas where there
are higher numbers of such accounts) and on adverse se-
lection and health care costs.
SEC. 512. DEDUCTION FOR 100 PERCENT OF HEALTH IN-
SURANCE COSTS OF SELF-EMPLOYED INDI-
VIDUALS.
(a) IN GENERAL.—Paragraph (1) of section 162(l)
of the Internal Revenue Code of 1986 is amended to read
as follows:
‘‘(1) ALLOWANCE OF DEDUCTION.—In the case
of an individual who is an employee within the
meaning of section 401(c)(1), there shall be allowed
as a deduction under this section an amount equal
to 100 percent of the amount paid during the tax-
215
able year for insurance which constitutes medical
care for the taxpayer and the taxpayer’s spouse and
dependents.’’.
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply to taxable years beginning after
December 31, 2001.
SEC. 513. CREDIT FOR HEALTH INSURANCE EXPENSES OF
SMALL BUSINESSES.
(a) IN GENERAL.—Subpart D of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of
1986 (relating to business-related credits) is amended by
adding at the end the following:
‘‘SEC. 45E. SMALL BUSINESS HEALTH INSURANCE EX-
PENSES.
‘‘(a) GENERAL RULE.—For purposes of section 38,
in the case of a small employer, the health insurance credit
determined under this section for the taxable year is an
amount equal to the applicable percentage of the expenses
paid by the taxpayer during the taxable year for health
insurance coverage for such year provided under a new
health plan for employees of such employer.
‘‘(b) APPLICABLE PERCENTAGE.—For purposes of
subsection (a), the applicable percentage is—
216
‘‘(1) in the case of insurance purchased as a
member of a qualified health benefit purchasing coa-
lition (as defined in section 9841), 30 percent, and
‘‘(2) in the case of insurance not described in
paragraph (1), 20 percent.
‘‘(c) LIMITATIONS.—
‘‘(1) PER
EMPLOYEE
DOLLAR
LIMITATION.—
The amount of expenses taken into account under
subsection (a) with respect to any employee for any
taxable year shall not exceed—
‘‘(A) $2,000 in the case of self-only cov-
erage, and
‘‘(B) $5,000 in the case of family coverage.
In the case of an employee who is covered by a new
health plan of the employer for only a portion of
such taxable year, the limitation under the preceding
sentence shall be an amount which bears the same
ratio to such limitation (determined without regard
to this sentence) as such portion bears to the entire
taxable year.
‘‘(2) PERIOD OF COVERAGE.—Expenses may be
taken into account under subsection (a) only with
respect to coverage for the 4-year period beginning
on the date the employer establishes a new health
plan.
217
‘‘(d) DEFINITIONS.—For purposes of this section—
‘‘(1) HEALTH
INSURANCE
COVERAGE.—The
term ‘health insurance coverage’ has the meaning
given such term by section 9832(b)(1).
‘‘(2) NEW HEALTH PLAN.—
‘‘(A) IN GENERAL.—The term ‘new health
plan’ means any arrangement of the employer
which provides health insurance coverage to em-
ployees if—
‘‘(i) such employer (and any prede-
cessor employer) did not establish or main-
tain such arrangement (or any similar ar-
rangement) at any time during the 2 tax-
able years ending prior to the taxable year
in which the credit under this section is
first allowed, and
‘‘(ii) 
such 
arrangement 
provides
health insurance coverage to at least 70
percent of the qualified employees of such
employer.
‘‘(B) QUALIFIED EMPLOYEE.—
‘‘(i) IN GENERAL.—The term ‘quali-
fied employee’ means any employee of an
employer if the annual rate of such em-
218
ployee’s compensation (as defined in sec-
tion 414(s)) exceeds $10,000.
‘‘(ii) TREATMENT
OF
CERTAIN
EM-
PLOYEES.—The term ‘employee’ shall in-
clude a leased employee within the mean-
ing of section 414(n).
‘‘(3) SMALL EMPLOYER.—The term ‘small em-
ployer’ has the meaning given to such term by sec-
tion 4980D(d)(2); except that only qualified employ-
ees shall be taken into account.
‘‘(e) SPECIAL RULES.—
‘‘(1) CERTAIN RULES MADE APPLICABLE.—For
purposes of this section, rules similar to the rules of
section 52 shall apply.
‘‘(2) AMOUNTS
PAID
UNDER
SALARY
REDUC-
TION ARRANGEMENTS.—No amount paid or incurred
pursuant to a salary reduction arrangement shall be
taken into account under subsection (a).
‘‘(f) TERMINATION.—This section shall not apply to
expenses paid or incurred by an employer with respect to
any arrangement established on or after January 1,
2010.’’.
(b) CREDIT TO BE PART OF GENERAL BUSINESS
CREDIT.—Section 38(b) of such Code (relating to current
year business credit) is amended by striking ‘‘plus’’ at the
219
end of paragraph (12), by striking the period at the end
of paragraph (13) and inserting ‘‘, plus’’, and by adding
at the end the following:
‘‘(14) in the case of a small employer (as de-
fined in section 45E(d)(3)), the health insurance
credit determined under section 45E(a).’’.
(c) NO CARRYBACKS.—Subsection (d) of section 39
of such Code (relating to carryback and carryforward of
unused credits) is amended by adding at the end the fol-
lowing:
‘‘(10) NO CARRYBACK OF SECTION 45E CREDIT
BEFORE EFFECTIVE DATE.—No portion of the un-
used business credit for any taxable year which is
attributable to the employee health insurance ex-
penses credit determined under section 45E may be
carried back to a taxable year ending before the date
of the enactment of section 45E.’’.
(d) DENIAL OF DOUBLE BENEFIT.—Section 280C of
such Code is amended by adding at the end the following
new subsection:
‘‘(d) CREDIT FOR SMALL BUSINESS HEALTH INSUR-
ANCE EXPENSES.—
‘‘(1) IN GENERAL.—No deduction shall be al-
lowed for that portion of the expenses (otherwise al-
lowable as a deduction) taken into account in deter-
220
mining the credit under section 45E for the taxable
year which is equal to the amount of the credit de-
termined for such taxable year under section
45E(a).
‘‘(2) CONTROLLED
GROUPS.—Persons treated
as a single employer under subsection (a) or (b) of
section 52 shall be treated as 1 person for purposes
of this section.’’.
(e) CLERICAL AMENDMENT.—The table of sections
for subpart D of part IV of subchapter A of chapter 1
of such Code is amended by adding at the end the fol-
lowing:
‘‘Sec. 45E. Small business health insurance expenses.’’.
(f) EFFECTIVE DATE.—The amendments made by
this section shall apply to amounts paid or incurred in tax-
able years beginning after December 31, 2001, for ar-
rangements established after the date of the enactment
of this Act.
SEC. 514. CERTAIN GRANTS BY PRIVATE FOUNDATIONS TO
QUALIFIED HEALTH BENEFIT PURCHASING
COALITIONS.
(a) IN GENERAL.—Section 4942 of the Internal Rev-
enue Code of 1986 (relating to taxes on failure to dis-
tribute income) is amended by adding at the end the fol-
lowing:
221
‘‘(k) CERTAIN QUALIFIED HEALTH BENEFIT PUR-
CHASING COALITION DISTRIBUTIONS.—
‘‘(1) IN GENERAL.—For purposes of subsection
(g), sections 170, 501, 507, 509, and 2522, and this
chapter, a qualified health benefit purchasing coali-
tion distribution by a private foundation shall be
considered to be a distribution for a charitable pur-
pose.
‘‘(2) 
QUALIFIED
HEALTH
BENEFIT
PUR-
CHASING COALITION DISTRIBUTION.—For purposes
of paragraph (1)—
‘‘(A) IN
GENERAL.—The term ‘qualified
health benefit purchasing coalition distribution’
means any amount paid or incurred by a pri-
vate foundation to or on behalf of a qualified
health benefit purchasing coalition (as defined
in section 9841) for purposes of payment or re-
imbursement of amounts paid or incurred in
connection with the establishment and mainte-
nance of such coalition.
‘‘(B) EXCLUSIONS.—Such term shall not
include any amount used by a qualified health
benefit purchasing coalition (as so defined)—
‘‘(i) for the purchase of real property,
222
‘‘(ii) as payment to, or for the benefit
of, members (or employees or affiliates of
such members) of such coalition, or
‘‘(iii) for any expense paid or incurred
more than 48 months after the date of es-
tablishment of such coalition.
‘‘(3) TERMINATION.—This subsection shall not
apply—
‘‘(A) to qualified health benefit purchasing
coalition distributions paid or incurred after
December 31, 2009, and
‘‘(B) with respect to start-up costs of a co-
alition which are paid or incurred after Decem-
ber 31, 2010.’’.
(b) QUALIFIED HEALTH BENEFIT PURCHASING CO-
ALITION.—
(1) IN GENERAL.—Chapter 100 of such Code
(relating to group health plan requirements) is
amended by adding at the end the following new
subchapter:
‘‘Subchapter D—Qualified Health Benefit
Purchasing Coalition
‘‘Sec.
9841.
Qualified health benefit purchasing coalition.
223
‘‘SEC. 9841. QUALIFIED HEALTH BENEFIT PURCHASING CO-
ALITION.
‘‘(a) IN GENERAL.—A qualified health benefit pur-
chasing coalition is a private not-for-profit corporation
which—
‘‘(1) sells health insurance through State li-
censed health insurance issuers in the State in which
the employers to which such coalition is providing
insurance are located, and
‘‘(2) establishes to the Secretary, under State
certification procedures or other procedures as the
Secretary may provide by regulation, that such coali-
tion meets the requirements of this section.
‘‘(b) BOARD OF DIRECTORS.—
‘‘(1) IN GENERAL.—Each purchasing coalition
under this section shall be governed by a Board of
Directors.
‘‘(2) ELECTION.—The Secretary shall establish
procedures governing election of such Board.
‘‘(3) MEMBERSHIP.—The Board of Directors
shall—
‘‘(A) be composed of representatives of the
members of the coalition, in equal number, in-
cluding small employers and employee rep-
resentatives of such employers, but
224
‘‘(B) not include other interested parties,
such as service providers, health insurers, or in-
surance agents or brokers which may have a
conflict of interest with the purposes of the coa-
lition.
‘‘(c) MEMBERSHIP OF COALITION.—
‘‘(1) IN
GENERAL.—A purchasing coalition
shall accept all small employers residing within the
area served by the coalition as members if such em-
ployers request such membership.
‘‘(2) OTHER MEMBERS.—The coalition, at the
discretion of its Board of Directors, may be open to
individuals and large employers.
‘‘(3) VOTING.—Members of a purchasing coali-
tion shall have voting rights consistent with the rules
established by the State.
‘‘(d) DUTIES OF PURCHASING COALITIONS.—Each
purchasing coalition shall—
‘‘(1) enter into agreements with small employ-
ers (and, at the discretion of its Board, with individ-
uals and other employers) to provide health insur-
ance benefits to employees and retirees of such em-
ployers,
225
‘‘(2) where feasible, enter into agreements with
3 or more unaffiliated, qualified licensed health
plans, to offer benefits to members,
‘‘(3) offer to members at least 1 open enroll-
ment period of at least 30 days per calendar year,
‘‘(4) serve a significant geographical area and
market to all eligible members in that area, and
‘‘(5) carry out other functions provided for
under this section.
‘‘(e) LIMITATION ON ACTIVITIES.—A purchasing coa-
lition shall not—
‘‘(1) perform any activity (including certifi-
cation or enforcement) relating to compliance or li-
censing of health plans,
‘‘(2) assume insurance or financial risk in rela-
tion to any health plan, or
‘‘(3) perform other activities identified by the
State as being inconsistent with the performance of
its duties under this section.
‘‘(f) ADDITIONAL REQUIREMENTS FOR PURCHASING
COALITIONS.—As provided by the Secretary in regula-
tions, a purchasing coalition shall be subject to require-
ments similar to the requirements of a group health plan
under this chapter.
‘‘(g) RELATION TO OTHER LAWS.—
226
‘‘(1) 
PREEMPTION
OF
STATE
FICTITIOUS
GROUP LAWS.—Requirements (commonly referred to
as fictitious group laws) relating to grouping and
similar requirements for health insurance coverage
are preempted to the extent such requirements im-
pede the establishment and operation of qualified
health benefit purchasing coalitions.
‘‘(2) ALLOWING
SAVINGS
TO
BE
PASSED
THROUGH.—Any State law that prohibits health in-
surance issuers from reducing premiums on health
insurance coverage sold through a qualified health
benefit purchasing coalition to reflect administrative
savings is preempted. This paragraph shall not be
construed to preempt State laws that impose restric-
tions on premiums based on health status, claims
history, industry, age, gender, or other underwriting
factors.
‘‘(3) NO WAIVER OF HIPAA REQUIREMENTS.—
Nothing in this section shall be construed to change
the obligation of health insurance issuers to comply
with the requirements of title XXVII of the Public
Health Service Act with respect to health insurance
coverage offered to small employers in the small
group market through a qualified health benefit pur-
chasing coalition.
227
‘‘(h) DEFINITION OF SMALL EMPLOYER.—For pur-
poses of this section—
‘‘(1) IN GENERAL.—The term ‘small employer’
means, with respect to any calendar year, any em-
ployer if such employer employed an average of at
least 2 and not more than 50 qualified employees on
business days during either of the 2 preceding cal-
endar years. For purposes of the preceding sentence,
a preceding calendar year may be taken into account
only if the employer was in existence throughout
such year.
‘‘(2) EMPLOYERS NOT IN EXISTENCE IN PRE-
CEDING YEAR.—In the case of an employer which
was not in existence throughout the 1st preceding
calendar year, the determination under paragraph
(1) shall be based on the average number of quali-
fied employees that it is reasonably expected such
employer will employ on business days in the current
calendar year.’’.
(2) CONFORMING AMENDMENT.—The table of
subchapters for chapter 100 of such Code is amend-
ed by adding at the end the following item:
‘‘Subchapter D.
Qualified health benefit purchasing coalition.’’.
(c) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to taxable years beginning after
December 31, 2001.
228
SEC. 515. STATE GRANT PROGRAM FOR MARKET INNOVA-
TION.
(a) IN GENERAL.—The Secretary of Health and
Human Services (in this section referred to as the ‘‘Sec-
retary’’) shall establish a program (in this section referred
to as the ‘‘program’’) to award demonstration grants
under this section to States to allow States to demonstrate
the effectiveness of innovative ways to increase access to
health insurance through market reforms and other inno-
vative means. Such innovative means may include (and are
not limited to) any of the following:
(1) Alternative group purchasing or pooling ar-
rangements, such as purchasing cooperatives for
small businesses, reinsurance pools, or high risk
pools.
(2) Individual or small group market reforms.
(3) Consumer education and outreach.
(4) Subsidies to individuals, employers, or both,
in obtaining health insurance.
(b) SCOPE; DURATION.—The program shall be lim-
ited to not more than 10 States and to a total period of
5 years, beginning on the date the first demonstration
grant is made.
(c) CONDITIONS FOR DEMONSTRATION GRANTS.—
(1) IN GENERAL.—The Secretary may not pro-
vide for a demonstration grant to a State under the
229
program unless the Secretary finds that under the
proposed demonstration grant—
(A) the State will provide for demonstrated
increase of access for some portion of the exist-
ing uninsured population through a market in-
novation (other than merely through a financial
expansion of a program initiated before the
date of the enactment of this Act);
(B) the State will comply with applicable
Federal laws;
(C) the State will not discriminate among
participants on the basis of any health status-
related factor (as defined in section 2791(d)(9)
of the Public Health Service Act), except to the
extent a State wishes to focus on populations
that otherwise would not obtain health insur-
ance because of such factors; and
(D) the State will provide for such evalua-
tion, in coordination with the evaluation re-
quired under subsection (d), as the Secretary
may specify.
(2) APPLICATION.—The Secretary shall not
provide a demonstration grant under the program to
a State unless—
230
(A) the State submits to the Secretary
such an application, in such a form and man-
ner, as the Secretary specifies;
(B) the application includes information
regarding how the demonstration grant will ad-
dress issues such as governance, targeted popu-
lation, expected cost, and the continuation after
the completion of the demonstration grant pe-
riod; and
(C) the Secretary determines that the dem-
onstration grant will be used consistent with
this section.
(3) FOCUS.—A demonstration grant proposal
under section need not cover all uninsured individ-
uals in a State or all health care benefits with re-
spect to such individuals.
(d) EVALUATION.—The Secretary shall enter into a
contract with an appropriate entity outside the Depart-
ment of Health and Human Services to conduct an overall
evaluation of the program at the end of the program pe-
riod. Such evaluation shall include an analysis of improve-
ments in access, costs, quality of care, or choice of cov-
erage, under different demonstration grants.
(e) OPTION TO PROVIDE FOR INITIAL PLANNING
GRANTS.—Notwithstanding the previous provisions of this
231
section, under the program the Secretary may provide for
a portion of the amounts appropriated under subsection
(f) (not to exceed $5,000,000) to be made available to any
State for initial planning grants to permit States to de-
velop demonstration grant proposals under the previous
provisions of this section.
(f) AUTHORIZATION
OF APPROPRIATIONS.—There
are authorized to be appropriated $100,000,000 for each
fiscal year to carry out this section. Amounts appropriated
under this subsection shall remain available until ex-
pended.
(g) STATE DEFINED.—For purposes of this section,
the term ‘‘State’’ has the meaning given such term for
purposes of title XIX of the Social Security Act.
TITLE 
VI—EFFECTIVE 
DATES;
COORDINATION 
IN 
IMPLE-
MENTATION
SEC. 601. EFFECTIVE DATES.
(a) GROUP HEALTH COVERAGE.—
(1) IN
GENERAL.—Subject to paragraph (2)
and subsection (d), the amendments made by sec-
tions 201(a), 401, 403, 501, and 502 (and title I in-
sofar as it relates to such sections) shall apply with
respect to group health plans, and health insurance
coverage offered in connection with group health
232
plans, for plan years beginning on or after October
1, 2002 (in this section referred to as the ‘‘general
effective date’’).
(2) TREATMENT OF COLLECTIVE BARGAINING
AGREEMENTS.—In the case of a group health plan
maintained pursuant to one or more collective bar-
gaining agreements between employee representa-
tives and one or more employers ratified before the
date of the enactment of this Act, the amendments
made by sections 201(a), 401, 403, 501, and 502
(and title I insofar as it relates to such sections)
shall not apply to plan years beginning before the
later of—
(A) the date on which the last collective
bargaining agreements relating to the plan ter-
minates (excluding any extension thereof agreed
to after the date of the enactment of this Act);
or
(B) the general effective date;
but shall apply not later than 1 year after the gen-
eral effective date. For purposes of subparagraph
(A), any plan amendment made pursuant to a collec-
tive bargaining agreement relating to the plan which
amends the plan solely to conform to any require-
233
ment added by this Act shall not be treated as a ter-
mination of such collective bargaining agreement.
(b) INDIVIDUAL HEALTH INSURANCE COVERAGE.—
Subject to subsection (d), the amendments made by sec-
tion 202 shall apply with respect to individual health in-
surance coverage offered, sold, issued, renewed, in effect,
or operated in the individual market on or after the gen-
eral effective date.
(c) TREATMENT OF RELIGIOUS NONMEDICAL PRO-
VIDERS.—
(1) IN GENERAL.—Nothing in this Act (or the
amendments made thereby) shall be construed to—
(A) restrict or limit the right of group
health plans, and of health insurance issuers of-
fering health insurance coverage, to include as
providers religious nonmedical providers;
(B) require such plans or issuers to—
(i) utilize medically based eligibility
standards or criteria in deciding provider
status of religious nonmedical providers;
(ii) use medical professionals or cri-
teria to decide patient access to religious
nonmedical providers;
(iii) utilize medical professionals or
criteria in making decisions in internal or
234
external appeals regarding coverage for
care by religious nonmedical providers; or
(iv) compel a participant or bene-
ficiary to undergo a medical examination
or test as a condition of receiving health
insurance coverage for treatment by a reli-
gious nonmedical provider; or
(C) require such plans or issuers to ex-
clude religious nonmedical providers because
they do not provide medical or other required
data, if such data is inconsistent with the reli-
gious nonmedical treatment or nursing care
provided by the provider.
(2) RELIGIOUS NONMEDICAL PROVIDER.—For
purposes of this subsection, the term ‘‘religious non-
medical provider’’ means a provider who provides no
medical care but who provides only religious non-
medical treatment or religious nonmedical nursing
care.
(d) TRANSITION FOR NOTICE REQUIREMENT.—The
disclosure of information required under section 121 of
this Act shall first be provided pursuant to—
(1) subsection (a) with respect to a group
health plan that is maintained as of the general ef-
fective date, not later than 30 days before the begin-
235
ning of the first plan year to which title I applies
in connection with the plan under such subsection;
or
(2) subsection (b) with respect to a individual
health insurance coverage that is in effect as of the
general effective date, not later than 30 days before
the first date as of which title I applies to the cov-
erage under such subsection.
SEC. 602. COORDINATION IN IMPLEMENTATION.
The Secretary of Labor and the Secretary of Health
and Human Services shall ensure, through the execution
of an interagency memorandum of understanding among
such Secretaries, that—
(1) regulations, rulings, and interpretations
issued by such Secretaries relating to the same mat-
ter over which such Secretaries have responsibility
under the provisions of this Act (and the amend-
ments made thereby) are administered so as to have
the same effect at all times; and
(2) coordination of policies relating to enforcing
the same requirements through such Secretaries in
order to have a coordinated enforcement strategy
that avoids duplication of enforcement efforts and
assigns priorities in enforcement.
236
SEC. 603. SEVERABILITY.
If any provision of this Act, an amendment made by
this Act, or the application of such provision or amend-
ment to any person or circumstance is held to be unconsti-
tutional, the remainder of this Act, the amendments made
by this Act, and the application of the provisions of such
to any person or circumstance shall not be affected there-
by.
TITLE VII—MISCELLANEOUS
PROVISIONS
SEC. 701. NO IMPACT ON SOCIAL SECURITY TRUST FUND.
(a) IN GENERAL.—Nothing in this Act (or an amend-
ment made by this Act) shall be construed to alter or
amend the Social Security Act (or any regulation promul-
gated under that Act).
(b) TRANSFERS.—
(1) ESTIMATE OF SECRETARY.—The Secretary
of the Treasury shall annually estimate the impact
that the enactment of this Act has on the income
and balances of the trust funds established under
section 201 of the Social Security Act (42 U.S.C.
401).
(2) TRANSFER
OF
FUNDS.—If, under para-
graph (1), the Secretary of the Treasury estimates
that the enactment of this Act has a negative impact
on the income and balances of the trust funds estab-
237
lished under section 201 of the Social Security Act
(42 U.S.C. 401), the Secretary shall transfer, not
less frequently than quarterly, from the general reve-
nues of the Federal Government an amount suffi-
cient so as to ensure that the income and balances
of such trust funds are not reduced as a result of
the enactment of such Act.
SEC. 702. CUSTOMS USER FEES.
Section 13031(j)(3) of the Consolidated Omnibus
Budget Reconciliation Act of 1985 (19 U.S.C. 58c(j)(3))
is amended by striking ‘‘2003’’ and inserting ‘‘2011, ex-
cept that fees may not be charged under paragraphs (9)
and (10) of such subsection after March 31, 2006’’.
SEC. 703. FISCAL YEAR 2002 MEDICARE PAYMENTS.
Notwithstanding any other provision of law, any let-
ter of credit under part B of title XVIII of the Social Se-
curity Act (42 U.S.C. 1395j et seq.) that would otherwise
be sent to the Treasury or the Federal Reserve Board on
September 30, 2002, by a carrier with a contract under
section 1842 of that Act (42 U.S.C. 1395u) shall be sent
on October 1, 2002.
SEC. 704. SENSE OF SENATE WITH RESPECT TO PARTICIPA-
TION IN CLINICAL TRIALS AND ACCESS TO
SPECIALTY CARE.
(a) FINDINGS.—The Senate finds the following:
238
(1) Breast cancer is the most common form of
cancer among women, excluding skin cancers.
(2) During 2001, 182,800 new cases of female
invasive breast cancer will be diagnosed, and 40,800
women will die from the disease.
(3) In addition, 1,400 male breast cancer cases
are projected to be diagnosed, and 400 men will die
from the disease.
(4) Breast cancer is the second leading cause of
cancer death among all women and the leading
cause of cancer death among women between ages
40 and 55.
(5) This year 8,600 children are expected to be
diagnosed with cancer.
(6) 1,500 children are expected to die from can-
cer this year.
(7) There are approximately 333,000 people di-
agnosed with multiple sclerosis in the United States
and 200 more cases are diagnosed each week.
(8) Parkinson’s disease is a progressive disorder
of the central nervous system affecting 1,000,000 in
the United States.
(9) An estimated 198,100 men will be diag-
nosed with prostate cancer this year.
239
(10) 31,500 men will die from prostate cancer
this year. It is the second leading cause of cancer in
men.
(11) While information obtained from clinical
trials is essential to finding cures for diseases, it is
still research which carries the risk of fatal results.
Future efforts should be taken to protect the health
and safety of adults and children who enroll in clin-
ical trials.
(12) While employers and health plans should
be responsible for covering the routine costs associ-
ated with federally approved or funded clinical trials,
such employers and health plans should not be held
legally responsible for the design, implementation, or
outcome of such clinical trials, consistent with any
applicable State or Federal liability statutes.
(b) SENSE OF THE SENATE.—It is the sense of the
Senate that—
(1) men and women battling life-threatening,
deadly diseases, including advanced breast or ovar-
ian cancer, should have the opportunity to partici-
pate in a federally approved or funded clinical trial
recommended by their physician;
240
(2) an individual should have the opportunity to
participate in a federally approved or funded clinical
trial recommended by their physician if—
(A) that individual—
(i) has a life-threatening or serious ill-
ness for which no standard treatment is ef-
fective;
(ii) is eligible to participate in a feder-
ally approved or funded clinical trial ac-
cording to the trial protocol with respect to
treatment of the illness;
(B) that individual’s participation in the
trial offers meaningful potential for significant
clinical benefit for the individual; and
(C) either—
(i) the referring physician is a partici-
pating health care professional and has
concluded that the individual’s participa-
tion in the trial would be appropriate,
based upon the individual meeting the con-
ditions described in subparagraph (A); or
(ii) the participant, beneficiary, or en-
rollee provides medical and scientific infor-
mation establishing that the individual’s
participation in the trial would be appro-
241
priate, based upon the individual meeting
the conditions described in subparagraph
(A);
(3) a child with a life-threatening illness, in-
cluding cancer, should be allowed to participate in a
federally approved or funded clinical trial if that
participation meets the requirements of paragraph
(2);
(4) a child with a rare cancer should be allowed
to go to a cancer center capable of providing high
quality care for that disease; and
(5) a health maintenance organization’s deci-
sion that an in-network physician without the nec-
essary expertise can provide care for a seriously ill
patient, including a woman battling cancer, should
be appealable to an independent, impartial body, and
that this same right should be available to all Ameri-
cans in need of access to high quality specialty care.
SEC. 705. SENSE OF THE SENATE REGARDING FAIR REVIEW
PROCESS.
(a) FINDINGS.—The Senate finds the following:
(1) A fair, timely, impartial independent exter-
nal appeals process is essential to any meaningful
program of patient protection.
242
(2) The independence and objectivity of the re-
view organization and review process must be en-
sured.
(3) It is incompatible with a fair and inde-
pendent appeals process to allow a health mainte-
nance organization to select the review organization
that is entrusted with providing a neutral and unbi-
ased medical review.
(4) The American Arbitration Association and
arbitration standards adopted under chapter 44 of
title 28, United States Code (28 U.S.C. 651 et seq.)
both prohibit, as inherently unfair, the right of one
party to a dispute to choose the judge in that dis-
pute.
(b) SENSE OF THE SENATE.—It is the sense of the
Senate that—
(1) every patient who is denied care by a health
maintenance organization or other health insurance
company should be entitled to a fair, speedy, impar-
tial appeal to a review organization that has not
been selected by the health plan;
(2) the States should be empowered to maintain
and develop the appropriate process for selection of
the independent external review entity;
243
(3) a child battling a rare cancer whose health
maintenance organization has denied a covered
treatment recommended by its physician should be
entitled to a fair and impartial external appeal to a
review organization that has not been chosen by the
organization or plan that has denied the care; and
(4) patient protection legislation should not pre-
empt existing State laws in States where there al-
ready are strong laws in place regarding the selec-
tion of independent review organizations.
SEC. 706. ANNUAL REVIEW.
(a) IN GENERAL.—Not later than 24 months after
the general effective date referred to in section 601(a)(1),
and annually thereafter for each of the succeeding 4 cal-
endar years (or until a repeal is effective under subsection
(b)), the Secretary of Health and Human Services shall
request that the Institute of Medicine of the National
Academy of Sciences prepare and submit to the appro-
priate committees of Congress a report concerning the im-
pact of this Act, and the amendments made by this Act,
on the number of individuals in the United States with
health insurance coverage.
(b) LIMITATION
WITH
RESPECT
TO
CERTAIN
PLANS.—If the Secretary, in any report submitted under
subsection (a), determines that more than 1,000,000 indi-
244
viduals in the United States have lost their health insur-
ance coverage as a result of the enactment of this Act,
as compared to the number of individuals with health in-
surance coverage in the 12-month period preceding the
date of enactment of this Act, section 402 of this Act shall
be repealed effective on the date that is 12 month after
the date on which the report is submitted, and the submis-
sion of any further reports under subsection (a) shall not
be required.
(c) FUNDING.—From funds appropriated to the De-
partment of Health and Human Services for fiscal years
2003 and 2004, the Secretary of Health and Human Serv-
ices shall provide for such funding as the Secretary deter-
mines necessary for the conduct of the study of the Na-
tional Academy of Sciences under this section.
SEC. 707. DEFINITION OF BORN-ALIVE INFANT.
(a) IN GENERAL.—Chapter 1 of title 1, United
States Code, is amended by adding at the end the fol-
lowing:
‘‘§ 8. ‘Person’, ‘human being’, ‘child’, and ‘individual’
as including born-alive infant
‘‘(a) In determining the meaning of any Act of Con-
gress, or of any ruling, regulation, or interpretation of the
various administrative bureaus and agencies of the United
States, the words ‘person’, ‘human being’, ‘child’, and ‘in-