A BILL 
To amend title 38, United States Code, to modify and update 
provisions of law relating to nonprofit research and edu-
cation corporations, and for other purposes. 
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Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Veterans Nonprofit Re-
search and Education Corporations Enhancement Act of 
2009’’. 
SEC. 2. GENERAL AUTHORITIES ON ESTABLISHMENT OF 
CORPORATIONS. 
(a) AUTHORIZATION OF MULTI-MEDICAL CENTER RE-
SEARCH 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 fol-
lowing new subsection (b): 
‘‘(b)(1) Subject to paragraph (2), a corporation estab-
lished under this subchapter may facilitate the conduct of 
research, education, or both at more than one medical cen-
ter. Such a corporation shall be known as a ‘multi-medical 
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 medical 
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center director of such center as specified in section 
7363(a)(1)(A)(i) of this title. 
‘‘(3) In facilitating the conduct of research, education, 
or both at more than one Department medical center under 
this subchapter, a multi-medical center research corpora-
tion may administer receipts and expenditures relating 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 ap-
proves a resolution permitting facilitation by the cor-
poration 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.— 
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(1) IN GENERAL.—Section 7361 of such title, as 
amended by subsection (a) of this section, is further 
amended by inserting after subsection (b) the fol-
lowing new subsection (c): 
‘‘(c) Any corporation established under this subchapter 
shall be established in accordance with the nonprofit cor-
poration laws of the State in which the applicable Depart-
ment medical center is located and shall, to the extent not 
inconsistent with any Federal law, be subject to the laws 
of such State. In the case of any multi-medical center re-
search corporation that facilitates the conduct of research, 
education, or both at Department medical centers 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 lo-
cated.’’. 
(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 sen-
tence; and 
(2) by inserting after subsection (c) the following 
new subsection (d): 
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‘‘(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 com-
ply only with those Federal laws, regulations, and executive 
orders and directives that apply generally to private non-
profit 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 amended 
in the first sentence— 
(1) by striking ‘‘Any corporation’’ and all that 
follows through ‘‘facilitate’’ and inserting ‘‘A corpora-
tion established under this subchapter shall be estab-
lished to provide a flexible funding mechanism for the 
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conduct of approved research and education at one or 
more Department medical centers and to facilitate 
functions related to the conduct of’’; and 
(2) by inserting before the period at the end the 
following: ‘‘or centers’’. 
(b) MODIFICATION OF DEFINED TERM RELATING TO 
EDUCATION AND TRAINING.—Subsection (b) of such section 
is amended in the matter preceding paragraph (1) by strik-
ing ‘‘the term ‘education and training’ ’’ and inserting ‘‘the 
term ‘education’ includes education and training 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 fol-
lowing 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 train-
ing for patients and families’’. 
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: 
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‘‘(1) with respect to the Department medical cen-
ter— 
‘‘(A)(i) the director (or directors of each De-
partment 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 edu-
cation; 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 
(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, med-
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ical, or scientific expertise, of benefit to the operations 
of the corporation.’’. 
(c) CLARIFICATION THAT DEPARTMENT EMPLOYEES 
MAY SERVE AS EXECUTIVE DIRECTORS.—Subsection (b) of 
section 7363 of such title is amended in the first sentence, 
by inserting after ‘‘executive director who’’ the following: 
‘‘may be an employee of the Department and who’’. 
(d) 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 
‘‘(a) IN GENERAL.—(1) A corporation established 
under this subchapter may, solely to carry out the purposes 
of this subchapter— 
‘‘(A) accept, administer, retain, and spend funds 
derived from gifts, contributions, grants, fees, reim-
bursements, and bequests from individuals and public 
and private entities; 
‘‘(B) enter into contracts and agreements with 
individuals and public and private entities; 
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‘‘(C) subject to paragraph (2), set fees for edu-
cation and training facilitated under section 7362 of 
this title, and receive, retain, administer, and spend 
funds in furtherance of such education and training; 
‘‘(D) reimburse amounts to the applicable appro-
priation 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 com-
pensation 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 train-
ing, and related travel, for the provision of legal services 
described in that paragraph and shall remain available for 
such use without fiscal year limitation. 
‘‘(b) TRANSFER AND ADMINISTRATION OF FUNDS.—(1) 
Except as provided in paragraph (2), any funds received 
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by the Secretary for the conduct of research or education 
at a Department medical center or centers, other than funds 
appropriated to the Department, may be transferred to and 
administered by a corporation established under this sub-
chapter 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 carried 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 applicable 
appropriation account of the Department and shall be 
available, without fiscal year limitation, for the purposes 
of that account. 
‘‘(c) 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 prescribed 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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‘‘(d) 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. 
‘‘(e) 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 executive 
orders, circulars, and directives that apply generally to the 
receipt and expenditure of funds by nonprofit organizations 
exempt from taxation under section 501(c)(3) of the Inter-
nal Revenue Code of 1986.’’. 
(b) CONFORMING AMENDMENT.—Section 7362(a) of 
such title, as amended by section 3(a)(1) of this Act, is fur-
ther 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 Secretary 
each year a report providing a detailed statement of the 
operations, activities, and accomplishments of the corpora-
tion during that year. 
‘‘(2)(A) A corporation with revenues in excess of 
$500,000 for any year shall obtain an audit of the corpora-
tion for that year. 
‘‘(B) A corporation with annual revenues between 
$100,000 and $500,000 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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‘‘(A) The most recent audit of the corporation 
under paragraph (2). 
‘‘(B) The most recent Internal Revenue Service 
Form 990 ‘Return of Organization Exempt from In-
come Tax’ or equivalent and the applicable schedules 
under such form.’’. 
(b) CONFLICT OF INTEREST POLICIES.—Subsection (c) 
of such section is amended to read as follows: 
‘‘(c) Each director, officer, and employee of a corpora-
tion established under this subchapter shall be subject to a 
conflict of interest policy adopted by that corporation.’’. 
(c) ESTABLISHMENT
OF APPROPRIATE PAYEE RE-
PORTING THRESHOLD.—Subsection (d)(3)(C) of such sec-
tion is amended by striking ‘‘$35,000’’ and inserting 
‘‘$50,000’’. 
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Union Calendar No. 123 
111TH CONGRESS 
1ST SESSION 
H. R. 2770 
[Report No. 111–225] 
A BILL 
To amend title 38, United States Code, to modify 
and update provisions of law relating to nonprofit 
research and education corporations, and for 
other purposes. 
JULY 23, 2009 
Reported with an amendment, committed to the Com-
mittee of the Whole House on the State of the Union, 
and ordered to be printed 
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