SEC. 2. GENERAL AUTHORITIES ON ESTABLISHMENT OF 
CORPORATIONS. 
(a) AUTHORIZATION OF MULTI-MEDICAL CENTER 
RESEARCH CORPORATIONS.— 
(1) IN
GENERAL.—Section 7361 of title 38, 
United States Code, is amended— 
(A) by redesignating subsection (b) as sub-
section (e); and 
(B) by inserting after subsection (a) the 
following new subsection (b): 
‘‘(b)(1) Subject to paragraph (2), a corporation es-
tablished under this subchapter may facilitate the conduct 
of research, education, or both at more than one medical 
center. Such a corporation shall be known as a ‘multi-med-
ical center research corporation’. 
‘‘(2) The board of directors of a multi-medical center 
research corporation under this subsection shall include 
the official at each Department medical center concerned 
who is, or who carries out the responsibilities of, the med-
ical center director of such center as specified in section 
7363(a)(1)(A)(i) of this title. 
‘‘(3) In facilitating the conduct of research, edu-
cation, or both at more than one Department medical cen-
ter under this subchapter, a multi-medical center research 
corporation may administer receipts and expenditures re-
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lating to such research, education, or both, as applicable, 
performed at the Department medical centers concerned.’’. 
(2) EXPANSION OF EXISTING CORPORATIONS TO 
MULTI-MEDICAL
CENTER
RESEARCH
CORPORA-
TIONS.—Such section is further amended by adding 
at the end the following new subsection: 
‘‘(f) A corporation established under this subchapter 
may act as a multi-medical center research corporation 
under this subchapter in accordance with subsection (b) 
if— 
‘‘(1) the board of directors of the corporation 
approves a resolution permitting facilitation by the 
corporation of the conduct of research, education, or 
both at the other Department medical center or 
medical centers concerned; and 
‘‘(2) the Secretary approves the resolution of 
the corporation under paragraph (1).’’. 
(b) RESTATEMENT AND MODIFICATION OF AUTHORI-
TIES ON APPLICABILITY OF STATE LAW.— 
(1) IN GENERAL.—Section 7361 of such title, 
as amended by subsection (a) of this section, is fur-
ther amended by inserting after subsection (b) the 
following new subsection (c): 
‘‘(c) Any corporation established under this sub-
chapter shall be established in accordance with the non-
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profit corporation laws of the State in which the applicable 
Department medical center is located and shall, to the ex-
tent not inconsistent with any Federal law, be subject to 
the laws of such State. In the case of any multi-medical 
center research corporation that facilitates the conduct of 
research, education, or both at Department medical cen-
ters located in different States, the corporation shall be 
established in accordance with the nonprofit corporation 
laws of the State in which one of such Department medical 
centers is located.’’. 
(2) CONFORMING AMENDMENT.—Section 7365 
of such title is repealed. 
(c) CLARIFICATION OF STATUS OF CORPORATIONS.— 
Section 7361 of such title, as amended by this section, 
is further amended— 
(1) in subsection (a), by striking the second 
sentence; and 
(2) by inserting after subsection (c) the fol-
lowing new subsection (d): 
‘‘(d)(1) Except as otherwise provided in this sub-
chapter or under regulations prescribed by the Secretary, 
any corporation established under this subchapter, and its 
officers, directors, and employees, shall be required to 
comply only with those Federal laws, regulations, and ex-
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ecutive orders and directives that apply generally to pri-
vate nonprofit corporations. 
‘‘(2) A corporation under this subchapter is not— 
‘‘(A) owned or controlled by the United States; 
or 
‘‘(B) an agency or instrumentality of the 
United States.’’. 
(d) 
REINSTATEMENT
OF
REQUIREMENT
FOR 
501(C)(3) STATUS OF CORPORATIONS.—Subsection (e) of 
section 7361 of such title, as redesignated by subsection 
(a)(1) of this section, is further amended by inserting 
‘‘section 501(c)(3) of’’ after ‘‘exempt from taxation 
under’’. 
SEC. 3. CLARIFICATION OF PURPOSES OF CORPORATIONS. 
(a) CLARIFICATION OF PURPOSES.—Subsection (a) 
of section 7362 of title 38, United States Code, is amend-
ed— 
(1) in the first sentence— 
(A) by striking ‘‘Any corporation’’ and all 
that follows through ‘‘facilitate’’ and inserting 
‘‘A corporation established under this sub-
chapter shall be established to provide a flexible 
funding mechanism for the conduct of approved 
research and education at one or more Depart-
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ment medical centers and to facilitate functions 
related to the conduct of’’; and 
(B) by inserting before the period at the 
end the following: ‘‘or centers’’; and 
(2) in the second sentence, by inserting ‘‘or cen-
ters’’ after ‘‘medical center’’. 
(b) MODIFICATION OF DEFINED TERM RELATING TO 
EDUCATION AND TRAINING.—Subsection (b) of such sec-
tion is amended in the matter preceding paragraph (1) 
by striking ‘‘the term ‘education and training’ ’’ and in-
serting ‘‘the term ‘education’ includes education and train-
ing and’’. 
(c) REPEAL OF ROLE OF CORPORATIONS WITH RE-
SPECT TO FELLOWSHIPS.—Paragraph (1) of subsection 
(b) of such section is amended by striking the flush matter 
following subparagraph (C). 
(d) AVAILABILITY OF EDUCATION FOR FAMILIES OF 
VETERAN PATIENTS.—Paragraph (2) of subsection (b) of 
such section is amended by striking ‘‘to patients and to 
the families’’ and inserting ‘‘and includes education and 
training for patients and families’’. 
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SEC. 4. MODIFICATION OF REQUIREMENTS FOR BOARDS 
OF DIRECTORS OF CORPORATIONS. 
(a) REQUIREMENTS FOR DEPARTMENT BOARD MEM-
BERS.—Paragraph (1) of section 7363(a) of title 38, 
United States Code, is amended to read as follows: 
‘‘(1) with respect to the Department medical 
center— 
‘‘(A)(i) the director (or directors of each 
Department medical center, in the case of a 
multi-medical center research corporation); 
‘‘(ii) the chief of staff; and 
‘‘(iii) as appropriate for the activities of 
such corporation, the associate chief of staff for 
research and the associate chief of staff for 
education; or 
‘‘(B) in the case of a Department medical 
center at which one or more of the positions re-
ferred to in subparagraph (A) do not exist, the 
official or officials who are responsible for car-
rying out the responsibilities of such position or 
positions at the Department medical center; 
and’’. 
(b) REQUIREMENTS FOR NON-DEPARTMENT BOARD 
MEMBERS.—Paragraph (2) of such section is amended— 
(1) by inserting ‘‘not less than two’’ before 
‘‘members’’; and 
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(2) by striking ‘‘and who’’ and all that follows 
through the period at the end and inserting ‘‘and 
who have backgrounds, or business, legal, financial, 
medical, or scientific expertise, of benefit to the op-
erations of the corporation.’’. 
(c) CONFLICTS OF INTEREST.—Subsection (c) of sec-
tion 7363 of such title is amended by striking ‘‘, employed 
by, or have any other financial relationship with’’ and in-
serting ‘‘or employed by’’. 
SEC. 5. CLARIFICATION OF POWERS OF CORPORATIONS. 
(a) IN GENERAL.—Section 7364 of title 38, United 
States Code, is amended to read as follows: 
‘‘§ 7364. General powers 
‘‘(b) IN GENERAL.—(1) A corporation established 
under this subchapter may, solely to carry out the pur-
poses of this subchapter— 
‘‘(A) accept, administer, retain, and spend 
funds derived from gifts, contributions, grants, fees, 
reimbursements, and bequests from individuals and 
public and private entities; 
‘‘(B) enter into contracts and agreements with 
individuals and public and private entities; 
‘‘(C) subject to paragraph (2), set fees for edu-
cation and training facilitated under section 7362 of 
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this title, and receive, retain, administer, and spend 
funds in furtherance of such education and training; 
‘‘(D) reimburse amounts to the applicable ap-
propriation account of the Department for the Office 
of General Counsel for any expenses of that Office 
in providing legal services attributable to research 
and education agreements under this subchapter; 
and 
‘‘(E) employ such employees as the corporation 
considers necessary for such purposes and fix the 
compensation of such employees. 
‘‘(2) Fees charged pursuant to paragraph (1)(C) for 
education and training described in that paragraph to in-
dividuals who are officers or employees of the Department 
may not be paid for by any funds appropriated to the De-
partment. 
‘‘(3) Amounts reimbursed to the Office of General 
Counsel under paragraph (1)(D) shall be available for use 
by the Office of the General Counsel only for staff and 
training, and related travel, for the provision of legal serv-
ices described in that paragraph and shall remain available 
for such use without fiscal year limitation. 
‘‘(c) TRANSFER AND ADMINISTRATION OF FUNDS.— 
(1) Except as provided in paragraph (2), any funds re-
ceived by the Secretary for the conduct of research or edu-
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cation at a Department medical center or centers, other 
than funds appropriated to the Department, may be trans-
ferred to and administered by a corporation established 
under this subchapter for such purposes. 
‘‘(2) A Department medical center may reimburse the 
corporation for all or a portion of the pay, benefits, or 
both of an employee of the corporation who is assigned 
to the Department medical center if the assignment is car-
ried out pursuant to subchapter VI of chapter 33 of title 
5. 
‘‘(3) A Department medical center may retain and 
use funds provided to it by a corporation established under 
this subchapter. Such funds shall be credited to the appli-
cable appropriation account of the Department and shall 
be available, without fiscal year limitation, for the pur-
poses of that account. 
‘‘(d) RESEARCH PROJECTS.—Except for reasonable 
and usual preliminary costs for project planning before its 
approval, a corporation established under this subchapter 
may not spend funds for a research project unless the 
project is approved in accordance with procedures pre-
scribed by the Under Secretary for Health for research 
carried out with Department funds. Such procedures shall 
include a scientific review process. 
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‘‘(e) EDUCATION ACTIVITIES.—Except for reasonable 
and usual preliminary costs for activity planning before 
its approval, a corporation established under this sub-
chapter may not spend funds for an education activity un-
less the activity is approved in accordance with procedures 
prescribed by the Under Secretary for Health. 
‘‘(f) POLICIES AND PROCEDURES.—The Under Sec-
retary for Health may prescribe policies and procedures 
to guide the spending of funds by corporations established 
under this subchapter that are consistent with the purpose 
of such corporations as flexible funding mechanisms and 
with Federal and State laws and regulations, and execu-
tive orders, circulars, and directives that apply generally 
to the receipt and expenditure of funds by nonprofit orga-
nizations exempt from taxation under section 501(c)(3) of 
the Internal Revenue Code of 1986.’’. 
(b) CONFORMING AMENDMENT.—Section 7362(a) of 
such title, as amended by section 3(a)(1) of this Act, is 
further amended by striking the last sentence. 
SEC. 6. REDESIGNATION OF SECTION 7364A OF TITLE 38, 
UNITED STATES CODE. 
(a) REDESIGNATION.—Section 7364A of title 38, 
United States Code, is redesignated as section 7365 of 
such title. 
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(b) CLERICAL AMENDMENTS.—The table of sections 
at the beginning of chapter 73 of such title is amended— 
(1) by striking the item relating to section 
7364A; and 
(2) by striking the item relating to section 7365 
and inserting the following new item: 
‘‘7365. Coverage of employees under certain Federal tort claims laws.’’. 
SEC. 7. IMPROVED ACCOUNTABILITY AND OVERSIGHT OF 
CORPORATIONS. 
(a) ADDITIONAL INFORMATION
IN ANNUAL RE-
PORTS.—Subsection (b) of section 7366 of title 38, United 
States Code, is amended to read as follows: 
‘‘(b)(1) Each corporation shall submit to the Sec-
retary each year a report providing a detailed statement 
of the operations, activities, and accomplishments of the 
corporation during that year. 
‘‘(2)(A) A corporation with revenues in excess of 
$300,000 for any year shall obtain an audit of the cor-
poration for that year. 
‘‘(B) A corporation with annual revenues between 
$10,000 and $300,000 shall obtain an audit of the cor-
poration at least once every three years. 
‘‘(C) Any audit under this paragraph shall be per-
formed by an independent auditor. 
‘‘(3) The corporation shall include in each report to 
the Secretary under paragraph (1) the following: 
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